Cboe Agrees To Acquire Erisx, Entering Digital Asset Space With Spot, Derivatives And Clearing Platform

ErisX’s futures exchange and clearing house are regulated by the CFTC, and ErisX’s clearing house is registered with FinCEN and licensed in many U.S. states and territories. ErisX runs a recognized and tested market surveillance program inclusive of trade practice surveillance and real-time surveillance with 24×7 capability and systems. Designing the right overall funding and implementation approach is critical to the principle of maximizing economic opportunity and doing no harm by proactively addressing affordability, livability, and ways to reduce negative development impacts. Economic benefits such as job creation; development of a diverse and skilled environmental workforce; community prosperity and stability; returns on investment for opportunity communities; lifecycle cost reduction or benefit/reduction of rate impacts; minimization of public debt; maximization of use of various available grants and lowest cost financing. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Equitable infrastructure investment is only possible by working together and sharing ideas and best practices.

multi asset trading infrastructure development practices

Similarly, if a broker trades just one digital asset security, the SEC may regulate that broker’s trading of all digital assets. Perhaps the most effective efforts to green the digital asset markets are those that make the underlying technologies more energy efficient, such that the same output can be achieved with less power. An opportunity to shift this process towards more equitable processes and outcomes lies in shaping the program or project brief and selection process to prioritize approaches that achieve financial, social, and environmental benefits and community priorities. Some utilities also include requirements for participation by disadvantaged businesses and Project Labor Agreements, or other mechanisms that increase employment of underrepresented people.

A Primer On Digital Assets

The recordation of a transaction on a trustee’s ledger is much more energy efficient than trading on blockchains. As explained above, whenever a digital asset is bought or sold on a blockchain, computers undertake cryptographic computations to update the ledger. The transfer of a security on a trustee’s ledger does not require such energy-intensive calculations, as a database is simply updated. In a system where digital assets are held in trust, for each individual asset, the blockchain is updated only once to grant ownership of an asset to the trust company, and cryptographic calculations are completed only to record that transfer.

This report provides background information on digital assets, the roles they may serve in financial markets and in commerce, and the harms that come from a lack of regulation. Securities and Exchange Commission can play in regulating digital assets that are securities to address those harms. The report concludes with a brief discussion of how Congress and financial regulators beyond the SEC should respond to digital assets, stressing the need for Congress to appropriate significant funding toward regulation of the market. Other regulators must also pursue digital asset regulation to the fullest extent of their authorities, as delaying action will increase investor and consumer harm and exacerbate unnecessary risks. These latter plans and rules would mean that brokerages and exchanges have minimal errors and outages and that investors have continuous market access. Third-party trustees holding digital asset securities in trust results in similar energy efficiency gains.

multi asset trading infrastructure development practices

A few leading-edge utilities are also implementing social impact partnership opportunities with private sector partners working on their capital projects and programs, creating opportunities for firms to align corporate social responsibility efforts with communities impacted by the capital project. As discussed above, when digital assets are bought, sold, or otherwise transferred, information about that transfer is recorded on the asset’s blockchain and miners conduct complex cryptographic calculations, known as “mining” or “validating,” to ensure that the assets are not counterfeited or double-spent. This blockchain technology has created opportunities for new markets and new methods of conducting business that were unimaginable 15 years ago. 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 Agrees To Acquire Erisx, Entering Digital Asset Space With Spot, Derivatives And Clearing Platform

Although the imperative is for the private sector to migrate digital assets to more environmentally friendly technologies, the government also has a role to play in ensuring that the migration is efficient. Regulating some digital assets as securities will give the SEC several policy options that would help do just that. The SEC can use its existing authorities to green the blockchain, protect investors, and prevent money laundering, tax evasion, and criminal activity. Integrated benefits such as sustainable and sustaining investments (One Water, Net Zero, Zero Waste, One Health, equitable development, etc.)​; pre-disaster mitigation, risk reduction, and disaster preparedness; addressing non-regulated, generally unfunded community needs (e.g., flood risk mitigation)​; environmental justice​; reduction of seismic vulnerability, flood risk, other risk mitigation.

This single trustee could record all digital asset security transactions on its own ledger, removing the need for energy-intensive blockchain transactions entirely. First, for those digital assets that are securities (“digital asset securities”), the SEC could require issuers to disclose their blockchains’ environmental impacts. The SEC requires issuers of securities to disclose information that is necessary “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation,”55 and undoubtedly, investor knowledge of the environmental impacts of assets’ blockchains would help investors understand how much transaction fees, in the form of electricity costs, reduce returns on investments. For example, the SEC could require digital asset issuers to disclose which blockchain underlies their assets and the amount of computational power necessary to transact on that blockchain.

multi asset trading infrastructure development practices

Founded in 2018, ErisX was designed and built with regulatory compliance and operational integrity at the fore. Its real-time clearing system is designed to address settlement risk while collateral management helps to allow seamless movement of collateral between spot and futures accounts. ErisX’s infrastructure was built from the ground up to exceed traditional capital markets standards of performance and reliability, and its functionality includes a centralized limit order book, block trading and a low latency, high reliability design – all on a single technology platform accessible via FIX, REST, websocket and third-party ISVs. ErisX’s integrated product suite includes multiple digital currencies, stablecoins, physically delivered Bitcoin and Ether futures, and cash-settled futures. Understanding infrastructural, social, health, and environmental risks and how the project or program addressed those risks is critical.

The Secs Regulatory Role In The Digital Asset Markets

Every time that asset is bought or sold on that trustee’s platform thereafter, only the company’s ledger is updated. Because the energy required to update the trustee’s ledger is less than that required to update the blockchain, each transaction is more energy efficient than it otherwise would be. U.S. regulators’ imposition of sensible regulation on digital assets will be essential if the purported benefits of digital assets are to come to fruition.3 Fortunately, legislation is not required to begin addressing these and other concerns surrounding digital assets, and regulators are finally starting to apply their existing regulatory frameworks to the industry. Investors and the public expect regulators to ensure financial markets are safe from fraud and manipulation; and although new legislation may prove necessary in the future, regulators must begin using their existing statutory authorities to address many of the harms that digital assets cause. Regulators can and should use their authorities to limit greenhouse gas emissions from digital assets, protect consumers, and ensure full compliance with the law.

Having the SEC and the broker membership organization the Financial Industry Regulatory Authority —both of which have significant resources—involved in surveillance and enforcement would allow for greater execution of the securities rules and regulations, beyond what may be obtained through investor lawsuits alone. Although the SEC only has jurisdiction over securities and the brokers, dealers, and exchanges that transact in securities, it may still regulate the nonsecurities activities of these securities market participants. Even if an exchange lists just one digital asset security, the SEC may regulate that exchange for all digital assets trading on the platform.

Process improvements such as easier, less wasteful processes from investment to implementation; appropriate and accelerated adoption of best approaches​; avoidance and mitigation of unintended negative consequences​; disadvantaged business participation; adaptive management; alignment with overall planning and community goals. Environmental benefits such as source water replenishment and/or protection; climate mitigation/adaptation/action; soil protection or enhancement; air quality improvement. Sustain productive working groups, community oversight and advisory bodies, and other collaborative social infrastructure. Establish pipelines for people from high barrier and underrepresented groups to access careers in the water workforce, considering not only entry-level training and maintenance, but permanent positions at all levels of a utility—from operations to executive leadership. Inviting the community to benefit from the construction activities themselves, e.g., ensuring space for locally run food trucks near work sites or partnering with schools to educate students and residents about the project and safely tour the site.

The Secs Existing Regulatory Authorities Over Some Digital Assets

Understanding how original or baseline modeling held up and adjusting modeling for future projects and conditions is also important—even when certain trends, like climate and demographic shifts, are changing constantly. By embracing transparency and sharing expertise, project partners build trust among themselves and in their communities, all while helping build and mature the larger field of practice by making their approaches more replicable for others. For traditional water infrastructure projects, utilities often use a design-bid-build method of project delivery. In addition to securing the funds to proceed with projects, utilities—with either contracted or in-house expertise—scope and schedule projects, develop initial estimates, and issue requests for proposals for project design services. The utility then seeks construction bidders to construct the completed design while it remains responsible for reporting on and managing the new assets.

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. If one person wishes to sell an asset that another wishes to buy, it can be sold for cash or a different type of asset. Second, digital assets can be “mined.” In exchange for solving a repetitive mathematical function, known as mining, that is required to record new transactions and connect blocks, miners can be rewarded with new digital assets. Some types of digital https://globalcloudteam.com/ assets are limited as to the amount that can be created through mining—in theory, for example, there will never be more than 21 million bitcoins4—whereas some digital assets allow for an unlimited number to be mined or otherwise created. Because wallets are a string of numbers and letters, every transaction a wallet makes can be traced, but it may be difficult to link a wallet to an individual. Securities and Exchange Commission and other financial regulators must impose sensible regulations on digital assets to protect traders and investors.

  • 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.
  • The SEC requires issuers of securities to disclose information that is necessary “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation,”55 and undoubtedly, investor knowledge of the environmental impacts of assets’ blockchains would help investors understand how much transaction fees, in the form of electricity costs, reduce returns on investments.
  • ErisX’s integrated product suite includes multiple digital currencies, stablecoins, physically delivered Bitcoin and Ether futures, and cash-settled futures.
  • Having the SEC and the broker membership organization the Financial Industry Regulatory Authority —both of which have significant resources—involved in surveillance and enforcement would allow for greater execution of the securities rules and regulations, beyond what may be obtained through investor lawsuits alone.
  • As a global market infrastructure provider, Cboe is uniquely positioned to offer a digital asset marketplace focused on regulatory compliance and transparency to help institutions embrace the digital asset class and offer digital asset trading to their clients.
  • In a system where digital assets are held in trust, for each individual asset, the blockchain is updated only once to grant ownership of an asset to the trust company, and cryptographic calculations are completed only to record that transfer.

They might consider the costs of debt and administration, cost and ease of implementation, performance related to priorities and obligations, available expertise and capacity, and other factors. While the bulk of the new federal influx will be through traditional SRF channels, there is an opportunity to aggregate and leverage different sources of funding and to innovate. Multi Asset Trading Infrastructure Different sources of funding and frameworks for financing and delivery come with different terms, benefits, limitations, and obligations. Matching priorities to funding sources can often mean matrixing various funds and financing approaches together. This is especially true of projects or programs that seek to maximize benefits or address multiple community priorities.

As a global market infrastructure provider, Cboe is uniquely positioned to offer a digital asset marketplace focused on regulatory compliance and transparency to help institutions embrace the digital asset class and offer digital asset trading to their clients. Because listed securities are easier for the public to trade, limiting digital asset securities to the greenest blockchain technologies would incentivize issuers to migrate to those technologies. Traditional single and limited-goal planning approaches, the backlog of needed water investments, and time pressures to obtain Infrastructure Investment and Jobs Act funding conspire toward business-as-usual outcomes. However, the IIJA provides a critical opportunity to re-envision and reimagine how capital investments are made in water.

Centering Water Equity In Capital Projects: Applying Equitable Infrastructure Principles Across The Infrastructure Cycle

The markets for digital assets are a growing area of interest to investors and a growing area of concern for legislators and regulators; without market oversight and the transparency that regulation brings, not only will investors not understand the risks to their investments and be liable to be significantly harmed, but the purported benefits of digital assets will also certainly fail to come to fruition. Fortunately, although new legislation may be necessary in the future, regulators already have at least some legal authority—through enforcing the rules already in place and drafting new regulations—to address any issues that digital assets raise. This report has discussed the authority of the SEC to regulate digital asset securities, as well as the brokers, dealers, and exchanges that facilitate their transactions, and has encouraged it to do so in ways that improve the climate footprint of the assets, protect consumers, and prevent money laundering and tax evasion. Importantly, products with these functions—and the infrastructure developed around them—have traditionally been regulated in the U.S. financial system to ensure that prices are stable; that investments are driven fairly and in an orderly and efficient manner to their most productive uses; that investors are protected; and that the public interest is served. The SEC, the Commodity Futures Trading Commission , the Financial Crimes Enforcement Network , the federal banking regulators, and the Federal Trade Commission all have potential jurisdiction and roles to play in regulating the digital asset markets.

This market data offering is expected to be modeled after established best execution practices in other asset classes, ultimately intending to develop a benchmark to help Cboe Digital’s industry partners and other market participants evaluate the appropriateness of crypto execution prices. The last phase of the infrastructure investment cycle discussed here is about evaluating what worked, what failed, what goals were and weren’t achieved, how well certain methods played out, and then using these lessons to adapt future approaches. Done sufficiently, evaluation includes a holistic project assessment and not just an assessment of regulatory or funder-prescribed obligations. The size and pace of the risks and cycles of change water managers face are escalating, and even with enhanced engagement, nimble evaluation and adaptive management are even more critical. 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.

And with growing rate pressure and local lowest-bid requirements, it can be difficult for utilities to use selection criteria aside from lowest cost and qualifications. Over the past few decades, utilities have begun to employ alternative processes where teams submit one proposal for multiple aspects of a project, including combinations of design, build, operation, and finance. Often, the concept of service equity in operations and maintenance (O&M) refers primarily to the long-term care of the infrastructure assets and their performance across a service territory.

One Water, One Future

Moving towards an equitable infrastructure paradigm means projects and programs achieve multiple goals, including addressing service, health, economic, and environmental disparities. Multi-benefit projects require deeper stakeholder engagement, inclusive goal setting, and meaningful and effective planning with key partners. By regulating digital asset securities, the SEC and FINRA would be able to require U.S.-based brokers trading in these assets, or those assisting U.S. clients, to comply with the various anti-money laundering and tax reporting laws. If these new brokers refuse, the SEC and FINRA would be able to revoke their licenses, putting them out of business. Furthermore, regulating digital asset securities and market participants would add “cops on the beat” to ensure that the laws are enforced. Regardless of whether the SEC acknowledges that a particular digital asset is a security or that a particular actor transacts in securities, private-party investors are permitted to bring suit against these actors under the securities laws.

Beyond simply providing information to investors so they can make decisions about where to invest their capital, the movement of capital from energy-inefficient digital assets to more efficient ones would incentivize issuers to migrate their ledgers away from energy-intensive technologies, reducing greenhouse gas emissions. 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. The industry partners Cboe brings to the ErisX ecosystem provide unmatched expertise for an expansive institutional and retail customer base. By running a front-to-back, purpose-built, regulatory-compliant platform, Cboe plans to offer the purest access to trading, clearing and data that exists in the spot and derivative digital asset marketplaces today.

Beyond the SEC requirements, exchanges could impose listing standards on digital asset securities in ways that protect investors. Some digital asset exchanges currently use this model,59 while others still record all updates on the blockchain. This has resulted in disjointed markets in which investors may only transact with others on the same exchange and any transactions between or off exchanges are energy intensive. If digital asset exchanges were to become subject to SEC regulations, requirements that they use trust companies that interface fully with one another could incentivize the creation of a single trustee for all digital asset securities.

Shifting this stage of the investment cycle towards equity requires continuous tending to the organizations, people, relationships, community priorities, and processes fostered throughout all the project phases. In this broader vision, performance needs to be measured against how elements work and are maintained to maximize service and other triple bottom line goals established at the project or program’s onset. With the historic federal investment into our water systems, water utilities and those who work closely with them can lead the charge to help ensure new dollars don’t lead to business-as-usual outcomes. The US Water Alliance’s Equitable Infrastructure Principles aspire to ensure federal water investments and outcomes are equitable, resilient, and capable of delivering multiple benefits, but can only do so when applied across the infrastructure cycle.

Typically, in the water sector, the utility receiving infrastructure funds is independently responsible for implementing a project or program. They obtain and spend the money, build the project with contracted firms, report on progress, and manage the new asset. New implementation frameworks and structures are beginning to emerge as more multi-benefit projects are designed and funded.

These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Partnering with other community investors who are planning capital projects, housing development, education opportunities, and other investments to maximize resident benefits and stability.

The US Water Alliance invites you to share your thoughts on social media using #OneWater, or by submitting ideas directly to Emily Simonson, Director of Strategic Initiatives, at Prioritize infrastructure maintenance, repair, and replacement using community need and equity-based criteria, distancing the prioritization as much as possible from politically-driven requests and over-reliance on complaints that tend to be disproportionately concentrated in wealthy areas with high levels of service. When applicable, turn infrastructure assets into community assets through designing for multiple uses and benefits, and by offering tours and educational outreach, community space, or venues for arts and cultural activities. Prioritizing the use of nature-based solutions, distributed infrastructure, and community partnership and accrual of benefits from infrastructure. We do not undertake, and we expressly disclaim, any duty to update any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

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