Cboe Takes Step Into DeFi by Posting Free Market Data on Pyth

(Bloomberg) — Cboe Global Markets Inc. is making some real-time market data freely available over blockchain, as the exchange operator makes its entry into decentralized finance.

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The Chicago-based firm is joining the Pyth Network, the Jump Trading Group-backed decentralized publisher of crypto and other market data, as a contributor. It will provide data of 10 equities starting in the fourth quarter.

“We are curious about the Defi landscape, and feel that participating in Pyth gives us the ability to learn what it is like to be a part of this new market,” Catherine Clay, head of data and access solutions at Cboe, said in an interview.

Market data is a lucrative business for exchange operators. Companies like Cboe and Nasdaq Inc. traditionally charge fees for professional users to access their data to make trading decisions. Increasingly, crypto funds are also considering paying for data from stock exchanges and other traditional markets.

Cboe, the first global major exchange operator joining Pyth, doesn’t see the move cannibalizing its core business, said Clay.

“We see it as an expansion of our current client base,” Clay said. “We don’t feel like it’s disruptive. This is another avenue where there are likely traders and users that aren’t necessarily participating in a traditional market.”

Pyth, initiated by Jump in 2021, is a decentralized network built to bring real-time market data feeds onto smart contracts for trading and lending. It counts trading heavyweights, such as Jane Street, DRW Holdings and Virtu Financial Inc., and crypto exchanges such as FTX, as its data contributors. The network has suffered from errors, most notably reporting a wrong Bitcoin price last year that caused some accidental liquidations.

Read More: Cboe Is Teaming With Virtu, Jane Street to Build Crypto Business

The partnership with Cboe “is a massive validation for what Pyth is trying to build,” director of the Pyth Data Association Michael Cahill said. Currently providing data on crypto, equities and foreign exchange, Pyth is looking to add other asset classes over time, such as options.

“In the long term there will be two markets, centralized and decentralized, and there will continue to be appetite for market data in both,” Cahill said.

Cboe was one of the first exchanges to list Bitcoin futures back in 2017, then exited the market in 2019 and was replaced by CME Group Inc. It also sought and failed to win approval from the Securities and Exchange Commission to list a Bitcoin exchange-traded product in 2016.

The company got back into cryptocurrencies with the acquisition of Eris Digital Holdings LLC, which gave them access to a spot market, regulated futures exchange and clearinghouse. Today that business has been re-branded “Cboe Digital,” with backing from financial firms including market makers DRW, Jane Street and Virtu Financial Inc.