Concluding a Productive Year with the Launch of our Futures Market
2019 was a milestone year for ErisX. With the launch of our futures market, we want to reflect on everything we have accomplished in the last 12 months. From securing new investments and regulatory licenses to building our technology stack and adding top-tier talent, we have been working hard to bring our vision for a digital asset marketplace to fruition.
Teams and Technology
We began 2019 by closing our Series B financing from a wide range of investors, including leading firms from the traditional and digital financial spaces. We are highly selective in our fundraising and believe we compiled the strongest cadre of digital and traditional market experts as they provide guidance on how ErisX can add value to the digital asset industry and accelerate growth.
We also strengthened the ErisX team by attracting the best and brightest with experience from an array of companies in digital assets (Axoni, Tradewind), banking (Barclays, Citi, Deutsche Bank, Goldman Sachs, UBS, Wells Fargo), technology (Google, Youtube), trading (Citadel, Sun Trading), exchanges (CBOE, CME Group, ICE, IEX), regulators (Commodity Futures Trading Commission, National Futures Association) and more. Every day this team brings their diverse experiences and skill sets to address the challenges and opportunities ahead, with a renewed commitment to build a unified platform for digital asset spot and futures trading. Finding the talent you need is difficult for any start-up; but finding the talent you really want is exceptional, and we are grateful to have done so.
In addition to ramping up our team this year, we developed state-of-the-art technology for our Exchange’s matching engine (TME™) and our Clearinghouse’s clearing system (TCS™). We subjected our architecture and hardware to rigorous testing to enable consistent performance and resilient operation. We also implemented a low latency design and architecture, and put our matching engine in a premier financial services data center to provide the performance and availability capital markets firms and traders expect. In addition to building high performance software, we developed risk mitigating functionality to enable efficient price discovery such as self-match prevention, price banding, and maximum order sizes — to name a few.
Next, we also went to work developing Eris Clearing’s clearing system. An entirely new platform was built for our futures clearing, it is one of the first built completely from scratch in decades. The talented team at ErisX produced something that incumbents only wish they had: a non-stop, 24x7 digital and fiat clearing system that processes every event and maintains customer segregated accounts in real time. No legacy code, just a system that can clear spot and futures on a modern stack built to the technology standards of today.
Building on our accumulated experience, heritage, and knowledge; our futures market leverages the Commodity Futures Trading Commission’s (CFTC) Designated Contract Market (DCM) license operated in our legacy platform. In addition to the DCM license, we secured a Derivatives Clearing Organization (DCO) license from the CFTC for our recently launched clearinghouse, Eris Clearing. Having the CFTC grant us the ability to clear and guarantee futures trades, which eliminates counterparty risk for our members, is an honor and privilege.
While our DCO license meets requirements on the federal level for Eris Clearing, we also made sure to meet federal and state requirements for our spot market this year. It was important for us to complement our futures market with a spot market to provide price transparency and collateral efficiencies. However, we could not operate this cash market without acquiring Money Service Business licenses under the Financial Crimes Enforcement Network (FinCEN) as well as Money Transmitter Licenses on the state level. To date, we offer spot trading in 44 states with plans to have coverage for 53 states and U.S. territories (sorry Hawaii). In addition to federal and state requirements, we apply CFTC core principles from the futures markets to our spot market to best protect our Members as well as the integrity of the market.
Everything we did this year was designed to improve the trading and investing experience for individuals and institutions looking to access digital assets. With company-wide goals for 2019 and regulatory deadlines requiring us to launch in December, we have rolled out our futures market in a cautious, prudent and risk-averse manner. While the end-of-year is traditionally a slow time for trading, we believe the more thoughtfully and diligently we can roll this platform out the better it is for us and our Members.
We know that growth in open interest will take time and there are clear challenges ahead. Introducing an intermediary market is a multi-step process, not an event, and our experience with such launches has taught us to build for longevity. However, we want to take a moment to highlight the innovation, hard work and tenacity of our entire ErisX team and our commitment to commence futures trading before the end of the year.
Early next year, we will be welcoming our intermediary partners such as futures commission merchants and brokerage houses into our marketplace. We are thrilled to see our intermediary-friendly vision come to fruition and watch our model bring familiarity and conventionality to the maturing digital asset space.
After a busy year of infrastructure and technology development, team building, and collaboration with regulators, we are pleased to close the year out by bringing our innovative platform for digital asset spot and regulated futures trading to life. We know there is still work to be done but we are inspired by the journey ahead of us, and look forward to helping shape the future of the digital asset ecosystem.