Coinbase to acquire FairX for CFTC-regulated derivatives trading

Rick Steves

The exchange operator has recently welcomed Charles Schwab Futures, Forex LLC, and E*TRADE to its list of partners, which includes Hudson River, Virtu Financial, XTX Markets, Tradovate, Ironbeam, Stage 5, EdgeClear, Bookmap, CQG, Rithmic, Sierra Chart, TradingView, and dxFeed.

Coinbase has announced the acquisition of FairX, a CFTC-regulated derivatives exchange or Designated Contract Market, as part of its strategy of developing a holistic trading environment for investors, including a regulated crypto derivatives to market.

The digital asset trading platform for retail and institutional customers will go down the derivatives trading road initially through FairX’s existing partner ecosystem and, over time, by leveraging FairX’s infrastructure to offer crypto derivatives to all Coinbase customers in the United States.

A well-regulated derivatives market is part of a maturing asset class, which brings Coinbase to FairX in order to make the derivatives market more approachable for millions of retail customers registered with Coinbase.

FairX signed top brokerages as partners

Coinbase is being advised O’Melveny & Myers while FairX tapped DLA Piper in order to make the acquisition deal go smoothly, although the companies did not disclose how much the deal is worth.

Since launching in June, FairX has seen volume consistently reaching new highs, with ADV growing 33% week-over-week. The exchange operator has recently welcomed Charles Schwab Futures, Forex LLC, and E*TRADE to its list of broker partners, which opens up distribution to a very large number of global clients.

Earlier in 2021, Hudson River Trading joined Virtu Financial and XTX Markets as a market maker and liquidity provider for FairX, thus strengthening the stream of quotes for the exchange’s listed products.

The distribution network of retail-focused brokers and vendors offering access to FairX futures also includes Tradovate, Ironbeam, Stage 5, EdgeClear, Bookmap, CQG, Rithmic, Sierra Chart, TradingView, and dxFeed.

FX and CFD brokers must go multi asset: Join free webinar from TraderEvolution to learn how

FairX caters to retail traders

Retail traders are generally considered as cannon fodder for institutions and larger traders at the big exchanges and it is interesting that FairX proposes to be an exchange for such a class of traders.

The idea is to create a futures exchange that will be smaller and simpler for active retail traders who may feel left out or swamped at the major futures exchanges that are dominated by the big players.

The exchange started with a list of products that includes futures on the Bloomberg US Large Cap Index, an index that tracks the largest 500 companies by market cap, the Bloomberg US Dollar Spot Index, which tracks the value of the U.S. dollar against a basket of international currencies, as well as the SuperTech Index, tracking 15 of the largest and most actively traded companies engaged in technology, media, and manufacturing industries.

FairX will bring a team with deep expertise across product development, market structure, and compliance to Coinbase, once the deal is completed in Coinbase’s first fiscal quarter. FairX will operate normally during this period.

The futures exchange’s straightforward approach and structure aligns with Coinbase’s commitment to creating a more fair, accessible, efficient, and transparent financial system enabled by crypto, the crypto exchange said.

Read this next

Retail FX

FF Simple and Smart Trades says Goodbye to CySEC authorization

The Cyprus Securities and Exchange Commission (CySEC) confirmed that it has wholly withdrawn the Cyprus Investment Firm (CIF) licenses of FF Simple and Smart Trades Investment Services Ltd.

Crypto Insider

Shining the Light in Crypto’s Dark Places

Something changed in regulators’ minds after the November crash of the FTX crypto exchange.

Executive Moves

Financial Commission Adds Sam Low to Dispute Resolution Committee

The Financial Commission (FinaCom PLC), a dispute resolution service that caters to the financial services industry, has appointed Sam Low as the newest member of its Dispute Resolution Committee (DRC).

Digital Assets, Uncategorized

De-facto owner of Bithumb exchange arrested in South Korea

South Korean prosecutors have arrested Kang Jong-Hyun, the anonymous chairman and owner of the country’s largest cryptocurrency exchange, Bithumb, on charges of embezzlement and stock manipulation.

Retail FX

Interactive Brokers volumes snap three-month losing streak

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes rose in January, an indication that investor confidence in the financial markets is rebounding after having been fairly mixed over the past few months.

Digital Assets

VVF invests $5 million in Everscale, a potential Layer 2 solution for Venom blockchain

“For us, this is a strategic investment aimed at the technological development of projects and teams around technologies that we focus on and actively develop. In particular, we are talking about the Venom blockchain project and its ecosystem, which is planned to be launched soon and for which Everscale is a potential Layer 2 solution.”

Institutional FX

FXSpotStream volume ends string of declines on January rebound

Trading volumes on institutional FX platforms surged in January as traders increased their bets on central bankers’ policy with evidence mounting that inflation and economic growth are both losing momentum.

Industry News

DeFi firm Aurox launches SEC-compliant crowdfunding campaign on tZERO

“This is a great opportunity for us to raise capital from our community and the broader public on a leading fully regulated platform. We are confident that the tZERO Markets platform will provide us with the exposure and reach we need to attract a diverse investors to support our business growth.”

Industry News

Morgan Stanley launches ETF platform with six ESG-focused products by Calvert

“These new ETFs will resonate strongly with investors who seek competitive investment results while promoting positive change and supporting companies that are leaders in improving long-term shareholder value and societal outcomes.”

<