CME - Gunning For CME's Golden Goose

2024-05-01 19:40:21 ET

Summary

• FMX Futures Exchange, launched by BGC Group, aims to challenge CME Group's dominance in the Treasury and interest rate futures markets.
• FMX plans to offer lower prices, advanced technology, and improved cross-margining through its partnership with LCH.
• The odds of FMX succeeding in breaking CME’s monopoly on Treasury and interest rate futures are low. But the competition could result in a few challenging years for CME.

US Treasuries are considered one of the safest and most easily traded securities in the world. There is currently roughly $27 trillion in outstanding Treasuries and an average of over $800 billion in par value is traded every day.

But that's just the cash Treasury market. Interest rate and Treasury futures are used to trade an average of $4.2 trillion in notional value each day.

And virtually all of that futures trading runs through one company - CME Group Inc. ( CME ).

Treasury and interest rate futures are the most frequently traded contracts on CME's exchange. In 2023, the segment made up over half of the average daily volume and brought in $1.56 billion, representing 28% of company revenues....

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