Eris Exchange to Create Crypto Market Backed by DRW, Virtu

(Bloomberg) -- Eris Exchange LLC, a Chicago-based derivatives market, is opening a cryptocurrency market backed by DRW Holdings Inc., Virtu Financial Inc. and TD Ameritrade Holding Corp.

The ErisX platform will let investors trade Bitcoin, Ether, Bitcoin Cash and Litecoin, as well as futures contracts on cryptocurrencies, according to spokeswoman Jessica Darmoni. The futures will be physically delivered, industry jargon that means when the contracts expire, owners will be given the underlying cryptocurrency, not cash. That’s important to some big players in finance who don’t trust the largely unregulated markets where Bitcoin and other digital coins currently trade.

DRW and Virtu already owned stakes in Eris, while retail brokerage TD Ameritrade is investing as part of the crypto initiative. DRW, whose Cumberland division is one of the world’s biggest crypto traders, and Virtu have agreed to be market makers on ErisX, which could help ensure a deep order book.

“Our retail clients are seeking to access and trade digital currency products in the same way they do with traditional capital markets – through a legitimate, regulated and transparent exchange,” Steve Quirk, executive vice president of trading and education at TD Ameritrade, said in a separate statement.

Additional backers of the new venture include Valor Equity Partners, NEX Opportunities and Cboe Global Markets Inc., ErisX said in a statement. Susquehanna International Group and ED&F Man Capital Markets Inc. also participated in the investment round, ErisX said.

Thomas Chippas, former head of global quantitative execution at Citigroup Inc., has joined as chief executive officer of ErisX, while Neal Brady is the executive chairman.

Despite Bitcoin’s astronomical surge last year, it’s still not widely used to buy and sell actual goods in most countries. Many startups have sought to take cryptocurrencies mainstream by developing exchanges or ways to let merchants accept them, but few have had success connecting all of the necessary players. The Eris exchange and Bakkt, a startup recently announced by New York Stock Exchange owner Intercontinental Exchange Inc., want to help change that. Bakkt also plans physically delivered futures.

ErisX is seeking to self-certify the new contracts with the U.S. Commodity Futures Trading Commission. The derivatives will be cleared by an Eris-owned clearinghouse that is also under review and must be approved by the CFTC, Darmoni said. Assuming the approvals are granted, the cash trading would begin in the second quarter of 2019 and the derivatives in the second half of next year, she said.

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