- The recently published report by WSJ showed that CME Group registered a Futures Commission Merchants (FCM) brokerage.
- It will help the investors to trade futures on the CME platform.
The FCM Registration of CME Group
As per the report by Wall Street Journal (WSJ) on September 30, 2022 the Futures Giant, CME Group files paperwork for the registration of FCM. The crypto exchange, FTX, already received a green signal from the regulators regarding the same. But along with the approval, the firm also received objections from the CME group. In a May hearing, Terrence Duffy, Chief Executive of CME Group said “the FTX model will significantly increase market risk.”
Still, in August 2022 CME group filed for the FCM registration, which is basically a brokerage that will let the investor use the CME marketplace to buy or sell futures.
While entry of CME Group into the Brokerage Business will prompt complaints from the futures commissions merchants that may lose revenue if the CME group cuts them on fees.
It must be noted that the following move by CME Group can save investor’s money, who used to pay fees for futures trading. On the other hand, it is also getting complaints from the other FCMs that may lose their revenue because of CME’s move.
For Wall Street banks clearing futures trades is really big business where FCM units played a key part of its prime-brokerage arms and for specialized firms such as Advantage Futures and R.J. O’Brien & Associates LLC.
Joseph Guinan, Chairman and Chief Executive of Advantage Futures said “I would not expect the CME to go down the path where they compete directly with FCMs for clients. However, if they did go down this path, that would be a game-changer for the FCM industry and a dramatic concern for every FCM.”
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Furthermore a spokeswoman for CME stated that “Our commitment to the FCM model and the significant risk management benefits it provides to all industry participants remains unwavering.”
The CME Group has not yet made any public announcement over this, but the spokeswoman affirmed to the WSJ last week regarding the submission of the application by CME.
Source: https://www.thecoinrepublic.com/2022/10/02/wsj-suggests-cme-group-registered-a-futures-commission-merchants/