The CME criticized crypto exchange FTX’s plan to cut out the middlemen in the futures markets. Now, the Chicago exchange giant is taking a step in the same direction. In August, CME submitted paperwork to register a futures commission merchant, or FCM - essentially, a brokerage that would allow investors to buy and sell futures on CME’s marketplace.
The move could save money for investors, who pay fees to trade futures. But it is likely to prompt complaints from other FCMs that could lose revenue if CME undercuts them on fees. Clearing futures trades is big business for Wall Street banks—where FCM units are a key part of their prime-brokerage arms—as well as for specialized firms such as Advantage Futures and R.J. O’Brien & Associates LLC. “I would not expect the CME to go down the path where they compete directly with FCMs for clients,” said Joseph Guinan, chairman and chief executive of Advantage Futures. “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.”