CME - FMX Futures Vs. CME Group - Why Copycats Fail

2024-01-26 07:07:47 ET

Summary

• FMX Futures, a new entrant among the futures exchanges, is relying on copycat markets, a strategy likely to fail.
• To compete with the established futures exchange, CME, a new exchange must maximize its uniqueness.
• The key to successful futures inter-exchange competition is to understand and take advantage of the impact of futures style clearinghouses.

Introduction

In two earlier posts, here and here , I argue that the road to success in inter-stock-exchange competition is through new listings, not copycats. Here I move from stock exchanges to futures exchanges. I introduce a hypothetical mate for the securities exchange, ENEX, a prototype of the qualities that will successfully compete with the overwhelmingly dominant CME Group....

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