Funds to fuel growth as CME Group portfolio margining unlocks swap dealer liquidity for Eris SOFR Swap Futures
Eris Innovations, an intellectual property licensing company that partners with global financial exchanges to develop futures products, today announced the closing of a $7.2 million strategic investment round. The announcement follows the February 27 addition of Eris SOFR Swap Futures (Eris SOFR) as products eligible for portfolio margining with interest rate swaps cleared by CME Group.
Each of the investors is affiliated with companies that trade Eris SOFR, including DV Trading, DRW, Virtu Financial, ARB Trading Group and Arclight Securities. As part of the deal, Jared Vegosen, co-founder of DV Trading, has joined the Eris Innovations board of directors.
“The recent inclusion of Eris SOFR in swaps portfolio margining is a defining moment for the Eris business,” said Vegosen. “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.”
Portfolio Margining reduces by 85-95% the cost of holding Eris SOFR positions against offsetting interest rate swaps cleared by CME Group. These savings help swap dealers and other market makers satisfy demand from market participants, especially leveraged investors taking advantage of Eris SOFR’s efficient futures margin levels to decrease their cost of hedging. A list of swap dealers offering block markets in Eris SOFR is available at erisfutures.com/blockmm.
“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,” said Michael Riddle, CEO of Eris Innovations. “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. End users carrying directional Eris SOFR positions can expect to save 50-70% in initial margin compared with an equivalently-structured cleared interest rate swap. Eris SOFR open interest has increased more than 150% since June 1.
