With our spot market live and gaining traction, ErisX is now gearing up to launch our futures Exchange and Clearinghouse for digital assets. In this week’s blog post we talk to Robert Thrash, Chief Operating Officer of ErisX and head of the Designated Contract Market (DCM) business, about how his experience with traditional derivatives markets has prepared him to advance digital assets as a new asset class for investors.
Prior to joining ErisX, he spent 12 years at Barclays Investment Bank where he was most recently the Managing Director and Global Head of Futures Execution Services and Clearing Platform Management. He had previously held various leadership roles across the firm’s prime services, execution services and Rates trading businesses.
Traditional Derivatives Markets Experience
“I started in this business as a quantitative analyst and in that role I worked on problems from a variety of markets, but mostly within FX and Rates,” said Robert, about his start in the derivatives space. “This exposure to markets motivated me to move into trading, namely to the buy-side, where for a number of years I focused on hedging bank mortgage portfolios’ interest rate risk.”
Around 2007, Robert moved to the sell-side trading USD Rates options and even had the opportunity to move to Tokyo to trade JPY Rates. While in this role for almost three years, he witnessed first-hand the unprecedented change within the markets due to the post-crisis regulatory environment.
“In particular derivatives markets were electronifying very rapidly, and the resultant changes in market microstructure gave rise to a lot of interesting problems across trading, financing and technology,” he said. “For example, capital usage became an important component of pricemaking, and integration of that into pricemaking and position management applications presented numerous technological and data management challenges.”
This market evolution led Robert from Rates market-making into the Prime Services sector where he was given the opportunity to lead the global Agency Derivatives Services business Treasury and Risk units at Barclays. He went on from there to run the Futures Execution business as well as manage the firm’s clearing platform.
“I was fortunate enough to work with deeply knowledgeable people in the Prime space across Repo, Futures and Equity Financing markets and technology,” he said. “One of those individuals was Thomas Chippas and when the opportunity to help him build a business here at ErisX presented itself, I was excited to take advantage of it.”
A Jump Into Crypto
Robert joined ErisX in February of 2019. He oversees the Product, Program Management, Technology and Market Operations groups at the Exchange.
“These teams drive and manage change through the organization: from product or platform specification and prioritization, through to resourcing of the associated technology build, and finally to production delivery and ongoing support.”
Robert is still building out his teams and remarked that the opportunities are quite diverse.
“They all rely on problem-solving skills and the ability to deliver within an environment of rapid change, be it technology, markets, products or regulatory environment,” he said. “Like any start-up, the pace is fast; like any financial services firm, the delivery standards are high.”
As head of the DCM business, Robert works closely with Liz James, who heads up ErisX’s Clearinghouse for spot contracts on digital assets, and who will also manage the Clearinghouse for regulated futures when our market goes live later this year. While ErisX has had it’s DCM license from the Commodity Futures Trading Commission (CFTC) since 2011 enabling it to operate a regulated futures exchange, ErisX was recently granted a Derivatives Clearing Organization (DCO) license by the CFTC to be able to clear futures trades as a central counterparty. With our DCO license in hand, ErisX plans to launch a unified spot and futures market as well as a Clearinghouse for digital asset futures contracts later this year.
“The change managed via these teams support both the Exchange as well as the Clearinghouse businesses and platforms,” he said. “We are focused on building the trading and financial resource infrastructure for digital assets typically associated with the more mature markets, these include the regulated DCM and DCO entities.”
Developing new markets similar to those related to traditional commodity markets is what Robert finds so intriguing about this space and opportunity.
“The ability for participants to gain exposure to these products no differently than how they would add Rates or Commodity exposure is the opportunity that drew me in,” he said. “The underlying technology, while still evolving, is solid and is changing the criteria of sound money, so the interest in trading these products continues to grow.”
Working Closely with Regulators
Tasked with building a futures market for digital assets does not come without challenges. Robert talked about some of the obstacles he sees and how ErisX is addressing them.
“The regulation around the trading and custody of digital assets continues to evolve, and so developing products in that environment requires that we work closely with these agencies,” he said. “We are delivering products that will fit within the regulatory framework they are creating.”
Robert also mentioned the challenges around custody, a topic ErisX has explored this year.
“Custody itself presents security hurdles and so we evaluate very carefully our storage technologies as well as those associated with our custodial relationships.”
In conclusion, Robert is excited to see and hear individuals talk about how the digital asset products fit their investment horizons and portfolio risk goals but stressed that everyone has his or her own risk tolerance.
“The discussions are very similar to those one might have with an investor making a choice regarding base or precious metals investments,” he said. “Adding derivatives to the digital asset market is a natural extension and we believe that it will further enhance the attractiveness of this new asset class.”