Report: CME Group to Face off With FTX After Filing for Futures Commission Merchant Status

According to a latest report, the world’s largest derivatives alternate CME Group is seeking to register as a direct futures fee service provider (FCM). CME Group’s determination follows the digital foreign money alternate FTX, because the crypto firm utilized to turn into a spinoff clearing group and awaits approval from the U.S. Commodity Futures Trading Commission (CFTC). If CME Group is authorized to be an FCM, the corporate can bypass third-party brokers and provide futures straight on the CME platform.

Derivatives Exchange CME Group Registers for FCM While FTX Awaits CFTC Approval

The world’s largest monetary derivatives alternate, CME Group, has reportedly filed paperwork to turn into a futures fee service provider (FCM), in accordance with a report revealed by the Wall Street Journal (WSJ). WSJ writer Alexander Osipovich defined CME filed the registration in August and Osipovich opines that the corporate is “taking cue from [the] crypto rival FTX.”

If CME Group’s FCM registration is authorized, CME will have the ability to provide derivatives straight with out the necessity for brokerage homes like TDAmeritrade, Saxo Bank Interactive Brokers, Robomarkets, and Grandcapital. FTX is awaiting approval from the CFTC to turn into a derivatives clearing group. Last March, the CFTC opened public feedback so it may get perception into FTX’s proposal. In mid-May, CME Group chair and chief govt officer Terry Duffy wrote that the transfer by FTX may current “market threat.”

“FTX’s proposal is obviously poor and poses [a] vital threat to market stability and market individuals,” Duffy opined on the time. “FTX proposes to implement a ‘threat administration mild’ clearing regime that may considerably enhance market dangers by probably eradicating as much as $170 billion of loss-absorbing capital from the cleared derivatives market, eliminating normal credit score checks, and destroying threat administration incentives by limiting capital necessities and mutualized threat.”

The report written by Osipovich particulars that the chairman and chief govt of Advantage Futures, Joseph Guinan, says the transfer could possibly be very dramatic. “I might not anticipate the CME to go down the trail the place they compete straight with FCMs for shoppers,” Guinan remarked. “However, in the event that they did go down this path, that may be a game-changer for the FCM trade and a dramatic concern for each FCM.”

While the CFTC weighs in on the FTX proposal, Osipovich cited Craig Pirrong, a finance professor on the University of Houston when he stated that CME’s FCM determination was a response to the FTX plan. “From a philosophical perspective, they would favor not to do that,” Pirrong stated on September 30. “But within the occasion that the CFTC does approve the FTX mannequin, from a aggressive perspective, they might really feel that they’ve to do that.”

Osipovich additionally revealed commentary from a CME Group spokesperson who commented on CME’s FCM August submitting. “Our dedication to the FCM mannequin and the numerous threat administration advantages it supplies to all trade individuals stays unwavering,” the CME Group consultant stated. In phrases of bitcoin (BTC) futures quantity, FTX and CME Group have comparatively the identical quantity of bitcoin futures open interest and BTC futures trade volume as properly.

What do you consider CME Group going head to head with FTX by making use of for a futures fee service provider standing? Let us know what you consider this topic within the feedback part under.