Eris secures funding as futures become eligible for margin savings

Eris SOFR swap futures listed on CME Group have received a double boost as the licensing firm behind the contracts has closed its latest round of funding just days after CME has made the Eris contracts eligible for portfolio margining within the larger CME interest rate swaps business.

Eris Innovations, the licensing firm that works with exchanges to develop products based on the Eris methodology, said it has secured $7.2m (£6m) in its latest funding round from investors linked to Eris SOFR trading clients including DV Trading, DRW, Virtu Financial, ARB Trading Group and Arclight Securities.

The additional funding emerged a week after CME Group made Eris SOFR swap futures eligible for portfolio margining against the US exchange’s vast swaps clearing book, which will make the Eris contracts far cheaper to trade for some clients.

Jared Vergosen, the co-founder of DV trading who joined the Eris Innovations board this month as part of the new funding round, said: “The recent inclusion of Eris SOFR in swaps portfolio margining is a defining moment for the Eris business. DV Trading has been an active market maker in Eris SOFR since its launch, and we plan to grow our presence to provide end users with the benefits of tighter markets.”

Eris estimates that the inclusion of its SOFR swap futures in the CME Clearing portfolio margining service could reduce by as much as 95% the cost of holding these positions for firms that already hold swaps positions within the US group’s clearing house.

Credit Suisse, DRW, Morgan Stanley and Societe Generale are among the list of market-making firms that provide liquidity in Eris SOFR swap futures, according to Eris.

Michael Riddle, CEO of Eris Innovations, said: “The next chapter of the Eris growth story starts this week, as swap dealers and Eris partner firms leverage portfolio margining to ramp up their activity in Eris SOFR. We appreciate the vote of confidence from investors who share our vision of Eris SOFR as a liquid benchmark futures contract, and welcome Jared to the board.”

Eris SOFR Swap Futures are cash-settled futures contracts listed at CME Group that replicate the risk  exposure of a standard SOFR overnight index swap, with tenors from 1-30 years, the firm said in a statement.

Cboe Global Markets completed in May last year its acquisition of Eris Digital Holdings (ErisX).