Cboe Global Markets to Revamp Digital Trading Operations and Shut Down Spot Market
Summary:
Equity exchange network Cboe Global Markets plans to restructure its digital trading operations, including the shutdown of its digital spot market in Q3 2024. Additionally, cash-settled Bitcoin and Ether futures contracts will transition from Cboe Digital Exchange to Cboe Futures Exchange in H1 2025, contingent on regulatory review and corporate approvals. Cboe Clear Digital will align with Cboe Clear Europe, reflecting the company's strategic review in light of regulatory uncertainty. The closure of the digital spot trading unit will lead to substantial savings, potentially reaching $11 million to $15 million annually.
Cboe Global Markets, a prominent equity exchange network, has detailed its intention to restructure its digital asset trades, which encompasses the shutdown of its digital spot market. A shift will occur as digital asset derivative trading leaves Cboe Digital to be incorporated into the Global Derivatives and Clearing divisions. The third quarter of 2024 is set as the closure period for Cboe Digital Spot Market. Regulatory review and certain corporate approvals are the precondition for the migration of cash-settled Bitcoin and Ether futures contracts from Cboe Digital Exchange to Cboe Futures Exchange in 2025's first half. An action plan has been formulated to align Cboe Clear Digital, the clearing unit of Cboe Digital, with Cboe Clear Europe under the joint leadership of Cboe Clear Europe's president, Vikesh Patel. Cboe stated unequivocally that Cboe's strategic review underlines these changes, which also mirrors regulatory obscurity in digital domain and Cboe's long-term strategy. Among the offers of Cboe Digital are Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), USD Coin (USDC) and Litecoin (LTC) products. The current shuffle might be influenced by ETH's prospective status as a security. The closure of its digital spot trading unit would bring substantial savings, with a mark down between $2-million and $4-million in 2024, though it would not significantly impact its 2024 net revenue. However, annual savings could reach between $11 million and $15 million. David Howson, the Global president of Cboe Global Markets, anticipates higher demand for exchange-traded digital asset derivatives for risk management, crypto exposures and to perk up operational and capital efficiencies. Cboe's digital asset space saw extensive expansion after the procurement of ErisX in May 2022. ErisX, a derivatives market, spot market, and clearing platform provider, was then converted into Cboe Digital. Yet the timing was ill-fated, coinciding with the arrival of the crypto winter. By August 2022, there was a reported $460 million goodwill impairment in Cboe's Q2 earnings results due to the ErisX purchase. Such an impairment occurs when a firm suffers losses after buying an asset at a higher cost than its book value, which subsequently depreciates. Come November 2022, Cboe Digital welcomed 13 investment partners.
Published At
4/26/2024 8:40:00 PM
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