BGC Group Announces CFTC Approval for FMX Futures Exchange

Rhea-AI Summary

BGC Group, Inc. (Nasdaq: BGC) has received CFTC approval for its FMX Futures Exchange to operate an exchange for U.S. Treasury and SOFR futures, challenging the dominance of CME in the U.S. interest rate market. The company's Fenics UST cash Treasury platform has rapidly grown to 25% market share, and FMX's clearing agreement with LCH SwapClear positions it to compete and reshape the U.S. interest rate market.

Insights

Market Research Analyst

The approval of BGC Group's FMX Futures Exchange by the CFTC represents a significant development in the financial markets sector. This approval allows FMX to offer U.S. Treasury and SOFR futures contracts, which are central to the interest rate derivatives market. The strategic move to compete with the CME's interest rate complex could potentially alter market dynamics by introducing a new player with competitive offerings. The growth of Fenics UST, as indicated by its increased market share, demonstrates BGC's capability to disrupt existing market structures and gain traction among traders.

From a market research perspective, this development could lead to increased liquidity and potentially tighter spreads for traders, as competition typically encourages market participants to improve their services and pricing. Additionally, the collaboration with LCH SwapClear may provide FMX with a robust infrastructure for clearing trades, which is crucial for maintaining market stability and confidence. This alliance could also yield cross-margin benefits, enhancing capital efficiency for market participants.

Financial Analyst

For investors and stakeholders in BGC Group, the CFTC approval for FMX Futures Exchange is a positive indicator of the company's growth prospects and its ability to innovate within the competitive landscape of financial exchanges. The integration of the Fenics UST cash Treasury platform with FMX Futures Exchange could enhance BGC's product differentiation and may lead to an increase in trading volumes and revenue.

Financially, the partnership with LCH SwapClear is particularly noteworthy as it could provide FMX with a competitive edge in terms of clearing efficiency and risk management. This could potentially attract a larger customer base looking for effective ways to manage their interest rate exposure. The ability to offer portfolio margining may result in significant cost savings for clients, which can translate into higher trading volumes and increased profitability for FMX and, by extension, BGC Group.

Economist

The entry of FMX Futures Exchange into the market for U.S. Treasury and SOFR futures is likely to have broader economic implications. By providing an alternative to the CME's U.S. interest rate complex, FMX could contribute to a more competitive and efficient financial ecosystem. This could potentially lead to more accurate price discovery and better risk management for financial institutions and other stakeholders.

Moreover, the increased competition may influence the cost of hedging interest rate risk, which is a significant factor for businesses and investors alike. In the long-term, a diversified market structure can foster resilience against systemic risks, as reliance on a single exchange is reduced. The move by FMX could encourage further innovation and investment in financial technology, which is critical for the evolution of global financial markets.

NEW YORK, Jan. 22, 2024 /PRNewswire/ -- BGC Group, Inc. (Nasdaq: BGC), today announced that its FMX Futures Exchange received Commodity Futures Trading Commission ("CFTC") approval to operate an exchange for U.S. Treasury and SOFR futures, the most widely traded futures contracts in the world, for trading on FMX¹.

Howard W. Lutnick, Chairman and CEO of BGC Group, a leading global brokerage and financial technology company, said, "With this CFTC approval, we will combine our leading Fenics UST cash Treasury platform with our FMX Futures Exchange to deliver competition across the CME's U.S. interest rate complex. For the first time, the most valuable futures market in the world will have real competition."

Howard W. Lutnick also commented, "Similar to U.S. interest rate futures, the wholesale U.S. Treasury market had historically been dominated by the CME until we launched Fenics UST. Since our launch, Fenics UST has grown rapidly, reaching 25 percent market share during the third quarter of 2023, up from 18 percent only a year ago². We will execute the same playbook with our FMX Futures Exchange."

FMX's clearing agreement with LCH SwapClear, one of the largest holders of interest rate collateral in the world, uniquely positions FMX to compete and reshape the U.S. interest rate market.

Robert Allen, President of FMX Futures Exchange, added, "FMX's global connectivity and vast distribution, combined with LCH's highly efficient cross-margin benefits will challenge CME's most valuable vertical, its U.S. interest rate complex. FMX is the first and only exchange to launch with all the tools necessary to compete and grow in the world's most important market."

Isabelle Girolami, CEO, LCH Limited said, "Our relationship with FMX is a key example of our commitment to open markets, collaboration and delivering further choice to the market. We are delighted to be working with a highly innovative exchange to bring a complete service offering across USD swaps, UST futures and SOFR STIRs to our members and clients. Our clearing capabilities will allow for portfolio margining across all these expressions of rates risk, meaningful margin efficiencies and effective risk management."

About BGC Group, Inc.
BGC Group, Inc. ("BGC") is a leading global brokerage and financial technology company. BGC, through its affiliates, specializes in the brokerage of a broad range of products, including Fixed Income (Rates and Credit), Foreign Exchange, Equities, Energy and Commodities, Shipping, and Futures. BGC, through its affiliates, also provides a broad range of services, including: trade execution, brokerage, clearing, trade compression, post-trade, information, and other back-office services to a broad range of financial and non-financial institutions. Through its brands, including Fenics®, FMX™, FMX Futures Exchange™, Fenics Markets Xchange™, Fenics Digital™, Fenics UST™, Fenics FX™, Fenics Repo™, Fenics Direct™, Fenics MID™, Fenics Market Data™, Fenics GO™, Fenics PortfolioMatch™, BGC®, BGC Trader™, kACE²™, and Lucera®, BGC offers financial technology solutions, market data, and analytics across a broad range of financial instruments and markets. BGC, BGC Group, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise Brokers, Poten & Partners, RP Martin, kACE², Capitalab, Swaptioniser, CBID, Caventor, LumeMarkets and Lucera are trademarks/service marks and/or registered trademarks/service marks of BGC and/or its affiliates.

BGC's customers include many of the world's largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, and investment firms. BGC's Class A common stock trades on the Nasdaq Global Select Market under the ticker symbol "BGC". BGC is led by Chairman of the Board and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcg.com. You can also follow BGC at https://twitter.com/bgcgroupinc, https://www.linkedin.com/company/bgc_group and/or http://ir.bgcg.com.

Discussion of Forward-Looking Statements about BGC
Statements in this document regarding BGC that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. These include statements about the Company's business, results, financial position, liquidity and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, BGC undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's Securities and Exchange Commission ("SEC") filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.

Media Contact: 
Jason Angrisani
+1 212-915-1224

Investor Contact:
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¹ Source: Futures Industry Association ("FIA").
² Central limit order book ("CLOB") market share. Source: Coalition Greenwich.

 

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SOURCE BGC Group, Inc.

FAQ

What is the latest CFTC approval for BGC Group, Inc.?

The latest CFTC approval is for its FMX Futures Exchange to operate an exchange for U.S. Treasury and SOFR futures, challenging the dominance of CME in the U.S. interest rate market.

What is the market share of Fenics UST cash Treasury platform?

Fenics UST has rapidly grown to 25% market share during the third quarter of 2023, up from 18% only a year ago.

What is the significance of FMX's clearing agreement with LCH SwapClear?

FMX's clearing agreement with LCH SwapClear positions it to compete and reshape the U.S. interest rate market.