TD Ameritrade’s ErisX is Approved for Physically Settled Bitcoin (BTC) Futures
CFTC granted TD Ameritrade-backed ErisX a derivatives clearing organization (DCO) license, under the Commodity Exchange Act (CEA). This approval allows the Eris Exchange to offer physically settled digital asset futures contracts. What exactly is so special about physically settling Bitcoin? They require the actual/physical use of Bitcoin, thus increasing its usage, and theoretically its price and scarcity.
On July 1, TD Ameritrade-backed ErisX announced that the Commodity Futures Trading Commission (CFTC) has granted it a derivatives clearing organization (DCO) license. The regulatory agency that has jurisdiction over futures markets granted ErisX Clearing the license under the Commodity Exchange Act (CEA). This new license will act as a supplement to the Designated Contract Market (DCM) license. Eris Exchange already holds the DCM license since 2011.
The Chief Executive Officer of ErisX, Thomas Chippas, explained saying:
“ErisX is unique in that for our digital asset market, we have divided the trading and settlement functions using traditional DCM (exchange) and DCO (clearing) models. This operational model reflects the structure that institutional investors anticipate from other asset classes and will help drive these markets toward greater relevance and accessibility.”
The ErisX clearinghouse will now provide services for the clearing of digital asset futures contracts traded on ErisX’s regulated derivatives market. This service will launch sometime later this year. After receiving the DCO license, Eris Clearing confirmed that it will comply with the 17 core principles under the CEA. Some of the core principles that ErisX must adhere to include risk management capabilities and rule enforcement policies. Also, the company must establish standards and procedures to shield members and participant funds. The General Counsel at ErisX, Laurian Cristea, added:
“Our clearinghouse is guided by a long-standing regulatory framework that protects participants and market integrity; and we are applying these same regulatory principles to our recently-launched spot market as well.”
CFTC seems to be gradually allowing different companies offering digital assets services to operate in the market. Recently, LedgerX was approved to settle futures in actual Bitcoins. In that event, the Bitcoin derivatives provider will offer physically settled BTC futures contracts to institutional and retail customers.
After the CFTC granted the DCO license to ErisX, Digital Asset Principle Investing at Susquehanna International Group, Dean Carlson, stated:
“ErisX has worked diligently with market authorities to build an environment that follows time-tested processes and guidelines, which is unique to the digital asset space.”