CME Group Expands Fixed Income Offerings with Launch of Corporate Bonds and Mortgage-Backed Securities on BrokerTec Quote

Rhea-AI Summary

CME Group has announced the expansion of its fixed income offerings with the introduction of corporate bonds and mortgage-backed securities (MBS) on its BrokerTec Quote platform. This launch, starting from May 20, 2024, complements the upcoming U.S. credit futures debut set for June 17, 2024. The addition includes U.S., euro, and sterling corporate bonds and MBS, enhancing BrokerTec Quote's capacity to manage risk and financing needs on a single platform. BrokerTec already handles $600 billion in average daily notional volume (ADNV) in repo transactions. This strategic move aims to provide clients with sophisticated tools to navigate fixed income markets efficiently.

Positive

• Expansion into corporate bonds and MBS enhances service offerings.
• Launch of U.S. credit futures on June 17, 2024, broadens product suite.
• BrokerTec Quote now offers comprehensive risk management tools.
• Addresses significant client demand for diverse fixed income products.
• BrokerTec already processes $600B ADNV in repo transactions.
• Strategic integration of U.S., euro, and sterling markets on a single platform.

Negative

• Implementation of new products may incur additional costs.
• Market competition in fixed income trading could impact profitability.
• Expansion risks associated with integrating new instruments.

Insights

Financial Analyst

CME Group's expansion into corporate bonds and mortgage-backed securities (MBS) on the BrokerTec Quote platform is significant. This move integrates more fixed income products into a single platform, potentially drawing more clients who seek efficiency in managing their risks and financing needs. The addition of U.S. credit futures also complements this strategy, broadening the scope of tradable instruments. The holistic product suite could lead to increased trading volumes and revenues for CME Group, particularly given BrokerTec's robust average daily notional volume (ADNV). Such expansions are typically viewed positively by investors because they signal growth and competitive positioning in the market.

Market Research Analyst

The launch of corporate bonds and MBS trading options aligns with a growing demand from institutional clients for comprehensive trading solutions. This expansion is timely, as the fixed income market experiences increased complexity and demand for sophisticated risk management tools. By providing a unified platform, CME Group enhances its value proposition, making it easier for clients to consolidate their trading activities. This could lead to a higher client retention rate and attract new users looking for a one-stop solution.

Additionally, the introduction of U.S. credit futures on June 17, 2024, can create new trading opportunities and hedging strategies, which might appeal to a broader range of market participants. The seamless integration of these products could also foster liquidity, making CME Group's offerings more attractive.

• Latest offering complements U.S. credit futures launching in June

CHICAGO, May 21, 2024 /PRNewswire/ -- CME Group, the world's leading derivatives marketplace, today announced that it will continue its expansion into the fixed income markets by launching repo on corporate bonds and mortgage-backed securities (MBS) on BrokerTec Quote, its dealer-to-client (D2C) request-for-quote (RFQ) trading platform. U.S. corporate bonds began trading on May 20, 2024, with the remaining products live by the end of June. Additionally, CME Group's U.S. credit futures will begin trading on June 17, 2024.

The addition of U.S., euro and sterling corporate bonds and MBS on BrokerTec Quote creates a holistic product suite with U.S. and euro repo on all major government bonds already available to trade on the platform. Following the launch, clients will be able to conduct their risk management and fixed income financing needs from one platform. This is in addition to BrokerTec's established dealer-to-dealer (D2D) central limit order book (CLOB) repo platform where almost $600B average daily notional volume (ADNV) of repo was transacted in 2023.

"In today's dynamic and complex financial landscape, navigating the fixed income markets for mortgages and credit presents unique challenges for clients who need sophisticated tools to manage their exposure and achieve their financing needs," said John Edwards, Global Head of BrokerTec. "We have been actively expanding BrokerTec Quote to cover repo on all major government bond markets in recent years. The addition of corporate bonds and MBS is a natural complement to our core offering and follows significant demand from clients."

BrokerTec is a leading marketplace for benchmark cash U.S. Treasuries and U.S. and EU repo with $750B ADNV traded daily across its D2D CLOB, D2C RFQ and streaming platforms.

For more information on BrokerTec Quote, visit www.cmegroup.com/brokertecquote.

As the world's leading derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals. The company offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world's leading central counterparty clearing providers, CME Clearing.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc.  CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc.  NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc.  COMEX is a trademark of Commodity Exchange, Inc. BrokerTec is a trademark of BrokerTec Americas LLC and EBS is a trademark of EBS Group LTD. The S&P 500 Index and the S&P 500 Dividend Points Index (Annual) are products of S&P Dow Jones Indices LLC ("S&P DJI"). "S&P®", "S&P 500®", "SPY®", "SPX®", US 500 and The 500 are trademarks of Standard & Poor's Financial Services LLC; Dow Jones®, DJIA® and Dow Jones Industrial Average are service and/or trademarks of Dow Jones Trademark Holdings LLC. These indices and trademarks have been licensed for use by Chicago Mercantile Exchange Inc. Futures contracts based on the Indices are not sponsored, endorsed, marketed, or promoted by S&P DJI, and S&P DJI makes no representation regarding the advisability of investing in such products. All other trademarks are the property of their respective owners.

BrokerTec Europe Limited is authorized and regulated by the UK Financial Conduct Authority.

CME Amsterdam B.V. is regulated in the Netherlands by the Dutch Authority for the Financial Markets (AFM) (www.AFM.nl).

BrokerTec Americas LLC. ("BAL") is a registered broker-dealer with the U.S. Securities and Exchange Commission, is a member of the Financial Industry Regulatory Authority, Inc. (www.FINRA.org), and is a member of the Securities Investor Protection Corporation (www.SIPC.org). BAL does not provide services to private or retail customers.

CME-G

 

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SOURCE CME Group

FAQ

What new products has CME Group added to BrokerTec Quote?

CME Group has added corporate bonds and mortgage-backed securities (MBS) to BrokerTec Quote.

When did U.S. corporate bonds start trading on BrokerTec Quote?

U.S. corporate bonds began trading on BrokerTec Quote on May 20, 2024.

What is the launch date for CME Group's U.S. credit futures?

CME Group's U.S. credit futures will start trading on June 17, 2024.

How much daily volume does BrokerTec handle in repo transactions?

BrokerTec handles an average daily notional volume of $600 billion in repo transactions.

Which markets are covered by the new additions on BrokerTec Quote?

The new additions cover U.S., euro, and sterling corporate bonds and mortgage-backed securities (MBS).

What are the benefits of the new fixed income offerings on BrokerTec Quote?

The new offerings provide comprehensive risk management and financing tools on a single platform, addressing significant client demand.