BGC Group Goes Live With FMX Futures Exchange, Expanding its Challenge to Established Players in U.S. Interest Rate Markets

BGC Group, Inc. has successfully launched its FMX Futures Exchange marking a significant milestone in its efforts to reshape the U.S. interest rate markets. This launch comes after receiving approval from the Commodity Futures Trading Commission (CFTC) in January 2024 to operate an exchange for U.S. Treasury and SOFR futures.

The new exchange is part of a broader initiative by BGC Group to challenge the dominance of established players in the U.S. interest rate complex. FMX combines BGC's U.S. cash treasuries platform with its spot foreign exchange platform and the newly launched futures exchange.

Howard W. Lutnick, Chairman and CEO of BGC Group and Chairman of FMX Holdings, LLC, stated, "We are excited to introduce real competition to the U.S. SOFR futures market and provide clients with much-needed innovation, superior pricing, and dramatically improved capital efficiency."

This launch follows a significant development in April 2024, when ten major global banks and market-making firms, including Bank of America, Barclays, Citadel Securities, Citi, Goldman Sachs, J.P. Morgan, Jump Trading Group, Morgan Stanley, Tower Research Capital, and Wells Fargo, became minority equity owners of FMX. This investment valued FMX at a post-money equity valuation of $667 million.

The FMX Futures Exchange is leveraging BGC's existing success in the cash U.S. Treasury market. The FMX UST platform (formerly known as Fenics UST) has been steadily gaining market share, reaching 28% by the end of the first quarter of 2024, up from 18% a year earlier.

A key component of FMX's strategy is its clearing partnership with LCH Limited, which is expected to provide significant capital efficiencies through cross-margining capabilities. Daniel Maguire, Group Head, LSEG Markets and CEO, LCH Group, commented on this partnership: "It will enable members and clients to benefit from our extended clearing capabilities and bring increased resiliency, margin efficiencies and liquidity to the USD rates derivatives market."

The exchange is currently offering SOFR futures trading and plans to add U.S. treasury futures in the first quarter of 2025. This expansion aims to provide a comprehensive offering that directly competes with established exchanges in the interest rate futures market.

Industry participants have expressed optimism about the new exchange. Geoff Weber, Head of G10 Rates Flow Trading at Citi, noted, "FMX's unique protocols provide a fresh competitive edge across rates, FX, and futures markets. This innovation not only promises to elevate market dynamics but also aims to lower costs for all market participants, signaling a forward-looking shift."