TD Ameritrade Invests In ErisX, A New Crypto Exchange

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Brokerage firm TD Ameritrade has invested in ErisX, a new cryptocurrency platform for spot trading and derivatives products. ErisX is led by Citigroup trading veteran Thomas Chippas. The company’s first product, which is a spot trading exchange, will be released next year. The company will offer bitcoin, bitcoin cash, ethereum, and litecoin to the investing public. It will also offer bitcoin futures contracts that are physically delivered.

ErisX is positioning itself among the select cryptocurrency exchanges and marketplaces that are regulated. With the exception of futures trading, cryptocurrencies are largely unregulated in the United States. Regulatory agencies have criticized practices at cryptocurrency exchanges which regularly report trading volumes running into billions of dollars. For example, New York’s Attorney General recently published a report listing malpractices that exchanges undertook to inflate their trading volumes.

“Whether someone is a direct client of ours or working through an intermediary, institutional investors have standards and mandates,” explained Chippas. “If others (cryptocurrency platforms and exchanges) don’t tick all those boxes, I’d like to think ours will.”

ErisX holds money transfer licenses in all 50 states, required for operating as a cryptocurrency exchange, and has a Designated Contract Marketplace (DCM) license (for futures trading). It has also applied for a clearinghouse license. In an interview, Chippas said ErisX was planning to broaden its customer reach through intermediaries that offer its retail products. TD Ameritrade, which plans to offer ErisX products to its customers, is one such intermediary.     

Why TD Ameritrade Invested In ErisX

Steve Quirk, executive vice president of Trading & Education at TD Ameritrade said the motivation behind their investment was to make cryptocurrency products accessible to the brokerage’s retail clients. “Our retail clients are seeking to access and trade digital currency products in the same way they do with traditional capital markets – through a legitimate, regulated and transparent exchange,” said Quirk.

TD Ameritrade already offers access to bitcoin futures traded on Cboe and CME through its firm.

According to JB Mackenzie, Managing Director of Futures & Forex at TD Ameritrade, client demand and interest in cryptocurrencies drove the brokerage’s decision to invest in ErisX. “There’s demand for spot trading and futures contracts for cryptocurrencies but customers want to access both those products from a single location,” he explained. TD Ameritrade will integrate ErisX products into its customer offerings.

The Omaha-based company already enables customers to trade Cboe bitcoin futures contracts. Mackenzie fashions TD Ameritrade’s foray into cryptocurrencies as a dual opportunity, one that is as much about offering investing products as about educating customers about the new asset class.  While he did not provide specific trading volumes or numbers related to bitcoin futures trading on TD Ameritrade’s platform, Mackenzie said the company had witnessed a 4x increase in views for its videos educating viewers about investing in cryptocurrency assets.