ErisX Takes on Bakkt With Launch of Physically Settled US Bitcoin Futures

Crypto derivatives platform ErisX is officially live with its physically settled bitcoin futures contracts, launching only the second such product suite in the U.S.

The company announced in a market notice Monday that its “Futures Digital Currency Products” would begin trading Tuesday, starting 8:00 a.m. Central Time (14:00 UTC). The marketplace’s daily trading hours run to 4:00 p.m. CT (22:00 UTC). In a pair of announcements shared exclusively with CoinDesk, the company elaborated on its new products, noting they would be trading alongside the company’s existing crypto spot exchange.

ErisX is only the second company to offer physically settled bitcoin futures in the U.S., following the launch of Intercontinental Exchange’s Bakkt futures contracts in September of this year. Cash-settled futures have been trading in the U.S. since 2017, when CME and Cboe launched their own products, though Cboe discontinued its bitcoin futures earlier this year.

According to a product page posted Monday, ErisX’s bitcoin futures will see a contract size of 0.1 bitcoin ($663 at current prices), with customers able to trade monthly or quarterly contracts at launch. Traders will have a position limit of 200,000 contracts and a minimum price increment of $1 per bitcoin (or $0.10 per contract).

While ErisX’s futures market is opening Tuesday, investors will not be able to participate through futures commission merchants or brokerages until early next year. A specific date has not yet been announced.

“We know that growth in open interest will take time and there are clear challenges ahead,” the company said in a blog post. “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.”

Early adopters

Wedbush Securities is one such futures commission merchant that will participate in the marketplace, according to a statement by Wedbush executive vice president Bob Fitzsimmons.

“ErisX has taken many steps to build out their intermediary-friendly model for digital assets including the consideration of how many FCMs manage back-office processes through FIS,” he said.

ErisX currently offers spot trading services in 44 different U.S. states, with plans to add another five states and four territories (Hawaii is not on this list).

In a statement, ErisX CEO Thomas Chippas said the company met “aggressive goals” in raising funds and building out its team, as well as with developing its matching engine and futures clearing system.

“After the Commodity Futures Trading Commission (CFTC) granted us a Derivatives Clearing Organization (DCO) license this summer, we have been focused on our offering and are thrilled to be ending the year with the launch of our futures market,” Chippas said.

Eris Exchange, a derivatives market provider founded in 2010, unveiled ErisX in October 2018, announcing the new crypto unit had received backing from major retail brokerage TD Ameritrade. Fidelity, Bitmain, ConsenSys and Nasdaq also participated in later funding rounds.

The company secured the regulatory licenses needed to offer futures products in the U.S. through 2018 and 2019, including its derivatives clearing organization (DCO) license in July.

ErisX will see small amounts of competition at launch, with only Bakkt offering a similar product at present. While fellow derivatives provider LedgerX is working to offer bitcoin futures products, the CFTC has yet to approve a final license for the company.

"The launch of ErisX's fully regulated futures market is a significant development for the digital asset industry," E*Trade SVP Chris Larkin said in a statement. "The more accessible contract size and transparent order book provides first time market participants exposure to digital assets through a familiar mechanism."