After FTX.US, CME Group proposes direct derivatives trading: WSJ

Quick Take

  • In May, CME Group executives slammed FTX for attempting to allow futures trading on its platform. 
  • Now, CME Group filed a similar proposal. 

CME Group is following in the footsteps of Sam Bankman-Fried's FTX.US, proposing to regulators its own plan to offer derivatives trading directly to consumers. 

CME Group, one of the largest exchanges for trading of derivatives and other financial contracts, filed paperwork to register as a so-called futures commission merchant (FCM), according to a report by The Wall Street Journal.

If the exchange's plans are approved by regulators, then traders would be able to trade derivatives directly through CME rather than through brokers. Typically individuals traders trade derivatives through a third-party brokerages like TDAmeritrade. 

CME's plan is similar to FTX.US's proposal to allow traders to post margin and trade crypto derivatives directly on its platform. 

"This is notable and comes as no surprise," noted CoinFund president Christopher Perkins, who took to LinkedIn to comment on the Journal's reporting. 

"The CME Group has desired direct relationships with clients for as long as I can remember." 

Still, CME spoke out against FTX's similar proposal. During a congressional hearing in May, CME Group CEO Terence Duffy asserted FTX.US made “false claims of innovations that are little more than cost-cutting regimes.” 

If its application is approved, CME entering the futures brokerage space is a “game changer” and a “dramatic concern for every FCM” should CME sets fees lower than such middlemen, Joseph Guinan, CEO of the FCM Advantage futures, told the Journal.

Regarding FCMs and risk management, a CME spokesperson told the Journal that, “Our commitment to the FCM model and the significant risk management benefits it provides to all industry participants remains unwavering.” 

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