Eris Innovations Brings Interest Rate Risk Hedging Within Reach for Every Bank
Interest rate risk has never been a “big-bank-only” issue, but for decades, the tools to manage it have largely been reserved for the biggest balance sheets. Major dealers and trillion-dollar institutions have dominated the swap market, backed by specialized infrastructure, legal teams, and dedicated risk staff. Community and regional banks, meanwhile, have often understood their interest rate exposure perfectly well but found the path to accessing swaps too steep, too costly, or too dependent on dealer appetite.
Eris Innovations exists because that divide stopped making sense. The Chicago-based firm didn’t set out to reinvent derivatives; it set out to reinvent access. Its goal has been to reshape a fundamental tool of interest rate risk management so it behaves the way it should for institutions of every size: cleanly, transparently, and without unnecessary operational drag. If the swap market were being built today, Eris’ structure is closer to how it would look.
That conviction drives a leadership team whose backgrounds span trading floors, accounting desks, audit practices, and direct work with banks that understood their risk but lacked a viable way to hedge it.
The Experts Who Solved Swap Access for Community Banks
Eris’ culture reflects the people drawn to it. Geoffrey Sharp, who leads product development and sales, spent years inside the global derivatives ecosystem at Credit Suisse in Europe, then at Lehman Brothers and Nomura in New York. Working with some of the largest mortgage hedgers in the world gave him a front-row view of how smaller institutions get crowded out.
“Long legal negotiations, changing dealer appetites, collateral demands, minimum trade sizes, those frictions add up,” Sharp says. “Plenty of banks knew exactly what they needed to do with interest rate risk. They just couldn’t get there through the traditional path.”
His colleagues approached the same problem from different angles.
Craig Haymaker spent his career working alongside banks wrestling with interest rate exposure, often watching institutions absorb volatility they could clearly see coming. “Interest rate risk isn’t a big bank problem; it’s an every-bank problem,” he says. “In so many cases, the issue wasn’t mismanaging the balance sheet. It was that the hedging path just wasn’t built for them.”
Haymaker also arrived at Eris with a firsthand appreciation for what access can mean. In a previous role, he worked with a West Texas community bank that used swap futures to hedge its mortgage loan portfolio. The outcome was tangible: the hedge was later estimated to have preserved roughly a quarter of the bank’s capital base during a challenging rate cycle.
“That experience crystallized something for me,” Haymaker explains. “Most of these institutions aren’t limited by expertise. They’re limited by infrastructure.”
The team’s proficiencies span public accounting and bank audit, valuations, confirmations, hedge accounting guidance, and the daily operational realities of risk management. That foundation shapes Eris’ emphasis on clean data, daily transparency, and accounting simplicity.
Together, these attributes form the core of Eris’ identity: people who have seen the friction points from every direction — trading, balance sheet strategy, accounting, and community banking — and who believe good ideas only matter if every institution can actually use them.
Why Swap Futures Matter Now
To appreciate what Eris built, it helps to revisit why traditional interest rate swaps remain inaccessible for many institutions.
A bilateral over-the-counter swap typically requires:
- A negotiated ISDA agreement
- A dealer-led credit review
- Legal and collateral arrangements
- Internal valuation tools or third-party analytics
- Specialized hedge accounting support
- Dealer willingness to trade in the bank’s preferred size
- Ongoing relationship-dependent pricing
The Problems with Traditional OTC Interest Rate Swaps
Even highly competent finance teams can’t always absorb that overhead. The setup process can take months. Appetite for smaller trades fluctuates. Fees and minimum thresholds shift with market conditions. Many institutions simply hear some version of, “You’re not big enough.”
Eris’ swap futures take a different path by transforming the traditional interest rate swap into a standardized futures contract listed on CME. The structure removes friction rather than adding it:
- No bilateral documentation
- No credit negotiation with a dealer
- Transparent exchange-based pricing and daily published valuation and accrual accounting data
- $100,000 contract sizes suited for smaller hedging needs
- Uniform treatment of all market participants
- Straightforward accounting due to exchange-based data
Sharp often describes it with a comparison familiar to any banker: adjusting allocations in a self-directed brokerage account. “You click, your exposure shifts, and the infrastructure behind the scenes handles the complexity,” he says. “For many banks, this is the first time a derivative behaves that way.”
Expertise vs. Access: Why Smaller Institutions Get Shut Out of Derivatives
A theme running through the Eris team’s experiences is that smaller institutions are not unsophisticated. They know their balance sheets. They understand duration. They feel the impact of rate moves acutely. What they’ve lacked is the infrastructure and sometimes the time to navigate an old-world derivatives process built for much larger players.
Sharp recalls years of watching institutions attempt to negotiate ISDAs while rate exposure built faster than legal teams could move. “You’d see banks that knew they needed to hedge, but by the time the paperwork was close to done, the market had already moved on them,” he says.
Others on the team remember institutions forced to simply “wait and hope” because they couldn’t convince a dealer to engage in the sizes they needed. “It’s not that they didn’t understand the risk,” Haymaker notes. “They just didn’t have a workable path to address it.”
This is where Eris’ mission gains human weight. Many on the team have seen what happens when a bank can finally hedge: volatility becomes manageable instead of existential; balance sheets stabilize; asset sensitivity becomes a decision, not a vulnerability. This emboldens, not demoralizes, and ambitious institutions are freed to grow.
Examples like the West Texas bank hedge aren’t outliers; they’re indicators of how much latent demand has existed, just waiting for a practical, accessible solution.
Why Derivatives Are Risk Reduction, Not Speculation
Some bankers still carry discomfort with derivatives, not because they misunderstand them, but because they associate them with speculative behavior. Eris spends significant time reframing that narrative.
“If rates rise 100 basis points and your balance sheet loses meaningful value, that’s not speculation, that’s unprotected exposure,” Sharp says. “A properly sized hedge is designed to offset that. If a bank is taking on more risk by hedging, it’s being used incorrectly.”
The broader supervisory environment is beginning to echo that perspective. After the bank failures of 2023–2024, several regulators began encouraging (rather than discouraging) the use of interest rate derivatives as part of sound asset-liability management. Many institutions are hearing that message differently now, especially as rate cycles become more erratic and earnings pressure intensifies.
Expanding Swap Futures and Options Contracts
Swap futures are just the beginning of Eris’ roadmap. The firm is preparing to introduce options on Eris contracts, expanding the toolkit in ways that mirror the evolution of established futures markets.
“The goal isn’t to replace traditional bilateral swaps,” Haymaker says. “Customization will always have its place. But most real-world hedging needs can be met with something cleaner and more scalable.”
Most balance sheet management isn’t exotic. It’s about duration, sensitivity, and ensuring that a 25-basis-point move doesn’t materially impair value. For those needs, standardization is ideal. Transparency is ideal. Exchange infrastructure is ideal.
“If the global swap market were being rebuilt today,” Haymaker adds, “this is much closer to the version most institutions would choose.”
Simple, Transparent, and Achievable Hedging
For community and regional banks, the importance of Eris Innovations is not that it created a new derivative. It’s that it built a simple, transparent, and operationally reasonable path to a tool that many institutions have needed for years but couldn’t realistically access.
The technology is sophisticated. The philosophy is not:
- Make hedging achievable.
- Make it transparent and fair.
- Make it available to the institutions that need it most.
Eris’ leaders don’t position themselves as disruptors or evangelists. They come across more like practitioners who saw a better way to do something essential and couldn’t ignore it.
“For us, success is when a bank that used to feel shut out of the derivatives market can treat interest rate risk like just another manageable part of running the business,” Haymaker says.
For the banks finally gaining access to tools long reserved for the largest players in the market, that shift couldn’t be arriving at a more important moment.
This article is brought to you in partnership with Eris Innovations, LLC. To learn more, visit https://www.erisfutures.com/.
