Cboe Global Markets, Inc, a leading provider of global market infrastructure and tradable products, announced it has entered into a definitive agreement to acquire Eris Digital Holdings, LLC (ErisX).
ErisX operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearing house. Ownership of ErisX presents a unique opportunity for Cboe to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency.
Cboe plans to operate the digital asset business as Cboe Digital. The company also has secured the support of a broad range of market participants, including well-established retail brokers, crypto-leading firms and sell-side banks, who are expected to form a Digital Advisory Committee tasked with advising Cboe on the ongoing development of the Eris spot and derivatives markets. As members of the Digital Advisory Committee, DRW, Fidelity Digital Assets, Galaxy Digital, Interactive Brokers, NYDIG, Paxos, Robinhood, Virtu Financial and Webull are committed to ongoing engagement with Cboe Digital markets.
Certain members of the Digital Advisory Committee listed above also intend to acquire minority ownership interests in Cboe Digital and to serve as partners in the growth of the business. Cboe Digital will leverage the engagement and collaboration with these market participants to continue to operate ErisX as a resilient, trusted and transparent digital asset venue.
Ed Tilly, Chairman, President and CEO of Cboe Global Markets, said:
“We believe our acquisition of ErisX, coupled with broad industry participation and support, will help us bring the regulatory framework, transparency, infrastructure and data solutions of traditional markets to the digital asset space. ErisX has shown an unwavering commitment to improving spot and derivatives crypto trading, and I am confident that together we can not only meet the growing demand for institutional and retail trading solutions but also push the boundaries of digital asset innovation and unlock its next phase of growth.”
Cboe plans to use its real-time, risk and derived data expertise and global network to provide a transparent view into digital asset markets and trade execution. Leveraging digital asset data from ErisX and Cboe’s existing index calculation capabilities, Cboe Digital intends to develop and distribute digital asset indices for potential use in ETP creation and other derivative product opportunities.
The transaction, which Cboe plans to fund with a combination of cash on hand and increased debt, is expected to close in the first half of 2022, subject to regulatory approvals and other customary closing conditions. Terms of the deal were not disclosed, however the company noted that the purchase price is not material from a financial perspective.
ErisX is positioned to be a long-term leader as regulation is expected to play an increasingly prominent role in digital assets, and following the closing, Cboe plans to make the early investments necessary to help maximize revenue growth potential over the medium and long term. Cboe anticipates ErisX will reach EBITDA profitability within two to three years after closing the deal, benefiting from a diversified stream of revenue drivers.