- CME submitted the registration back in August.
- The CFTC has not yet granted FTX clearance organization status for derivatives.
The WSJ stated that the CME Group, the biggest financial derivatives exchange in the world, has applied to become a futures commission merchant (FCM). According to WSJ writer Alexander Osipovich, CME submitted the registration back in August and is “taking cue from [the] crypto rival FTX.”
The approval of CME Group’s FCM registration would mean that the exchange may cut out middlemen like TDAmeritrade, Saxo Bank Interactive Brokers, Robomarkets, and Grandcapital in favor of offering derivatives directly to customers.
FTX Yet to Get Clearance
The CFTC solicited public feedback on FTX’s plan in March. Terry Duffy, chairman and chief executive officer of CME Group, cautioned that the FTX move might cause “market risk” in a letter he sent in the middle of May. The CFTC has not yet granted FTX clearance organization status for derivatives.
According to Duffy’s assessment at the time:
“FTX’s plan is glaringly lacking and presents [a] serious danger to market stability and market participants.FTX proposes to implement a ‘risk management light’ clearing regime that would significantly increase market risks by potentially removing up to $170 billion of loss-absorbing capital from the cleared derivatives market, eliminating standard credit checks, and destroying risk management incentives by limiting capital requirements and mutualized risk.”
According to Osipovich’s report, Advantage Futures’ chairman and CEO Joseph Guinan believes the change might be quite dramatic. Osipovich referenced Craig Pirrong, a finance professor at the University of Houston, when he said that CME’s FCM decision was a reaction to the FTX proposal; the CFTC is still deliberating on the matter. From their philosophical standpoint, they’d rather not do this, Pirrong said on September 30.
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