BGC (BGC.US) Launches FMX Futures Exchange, Challenges CME's (CME.US) Dominance

Market VisionTuesday, Sep 24, 2024 8:10 am ET

1min read

Zhitong Finance APP noticed that the newly established FMX Futures Exchange was created by BGC (BGC.US) and supported by top investment banks and market makers. The exchange was launched late on Monday, aiming to challenge the dominance of the Chicago Mercantile Exchange (CME.US) in the interest rate futures trading.

The platform initially launched futures on the secured overnight financing rate (SOFR), with U.S. Treasury futures to be added in the first quarter of 2025.

The exchange is part of FMX Holdings, which also operates the FMX UST and FX platforms. The company is backed by Wall Street heavyweights including Bank of America, Citadel Securities and JPMorgan. FMX will clear its futures through LCH, the clearing house controlled by the London Stock Exchange.

Interest rate futures are the most traded contracts in the world, with daily volumes of over $4 trillion last year. FMX is Lutnick's third attempt to challenge CME in the interest rate futures market.

Analysts at Bank of America recently warned: "We believe this poses the most credible threat to CME's decades-long monopoly in the interest rate futures market." The exchange may force CME to cut its pricing for interest rate futures by more than 10% "as a defensive strategy," they said.

Terry Duffy, CEO of CME, said in an interview in July: "I'm not sure what Lutnick's launch will result in." He mentioned the potential problems of relying on LCH in London.

Lutnick responded: "I have a lot of respect for CME and Terry Duffy." "I think it's time for them to show us the respect we deserve. FMX and BGC will be here to stay."

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