The majority of futures trading volume is concentrated on a few large exchanges around the world, such as the Chicago Mercantile Exchange Group (CME), the Intercontinental Exchange (ICE), and the Eurex Exchange. These large entities are the result of dramatic consolidation in the sector.

These large companies extract massive rent costs from their established markets. In the United States, futures exchanges are free to dictate where their products are cleared and may also own or control the clearing house. Market and network effects create a “winner take all” environment whereby participants have no choice but to migrate to the most liquid market. This often leads to a single dominant market for each type of futures contract. Additionally, with only a handful of exceptions, the products for one exchange have no counterpart in any others. For example, S&P 500 futures are only readily traded on CME, while cocoa futures reside solely on ICE. Liquidity, licensing agreements and strong network effects erect high barriers to entry. On a product by product basis, exchanges wield global monopolylike power.

Since futures liquidity is so concentrated yet global liquidity pools are distributed across various exchanges for different contracts around the world, it can be difficult for traders who wish to trade in multiple contract types to simply trade only on one platform -- and thus it is difficult to reap the potential benefits of cross-margining across contracts on a global basis.

The EMX exchange will include both traditional and cryptocurrency futures contracts. Futures on EMX should function largely the same as they do on traditional futures exchanges with a few exceptions. EMX will administer an auction-based matching model versus a central limit order book, and contract quantities traded may be fractional, while on traditional trading platforms, they are whole numbers.

The majority of their contracts will be highly correlated with existing products on liquid exchanges and EMX may utilize leading benchmarks as part of the settlement process for EMX settlements. The mechanics behind order matching and settlement are described in section 5.

Features:

• Contracts: EMX will list both crypto futures and traditional equity, commodity, and currency futures. Some of the initial contracts will include: BTC-USD, ETH-USD, LTC-USD, EMX Large Cap Crypto Index, US Equity Index, Gold. EMX system was built with scalability in mind and they will add additional contracts over time (crypto, equities, commodities, currencies, bonds, etc), in collaboration with their community and dictated by what traders around the world desire to trade.
• Platforms and Connectivity: They will launch a web-based trading platform with lightning-fast REST and WebSocket APIs. Additional enhancements will include: Mobile “responsive” web App, Native Android App, Native iOS App, Native Desktop Apps (Windows, OS X), FIX APIs.
• Language support: They will launch with English, Korean, Portuguese and Chinese language options in the trading application. Other languages (Japanese, Russian, etc) will be implemented over time.
• Fees and Revenue - Sources of revenue for EMX include:
  
  • Exchange fee: Trading fees on a notional basis, instead of per contract basis.
  • Withdrawal fee: EMX may charge a small withdrawal fee.
  • Liquidation fee: Traders who are force liquidated due to insufficient margin will be charged a liquidation fee, which will be used to fund the guarantee fund.
  • Other fees: New features of the EMX platform may charge fees (for example, lending).