CME Group Offers Direct Trading Of Crypto Derivatives To Regulators

CME Group, a US-based financial derivatives exchange, has offered regulators its plan to bring derivatives trading directly to retail clients.

According to Saturday’s Wall Street Journal report, CME Group has filed documents to register as a so-called forward commissioner (FCM).

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Retail investors typically trade derivatives through third-party brokers such as TDMeritrade. If regulators approve the CME’s plans, individual consumers could then trade derivatives directly through the CME rather than through brokerages.

Market participants talked about the new development. “It’s remarkable and it’s not a surprise. CME Group has wanted direct customer relationships for as long as I can remember,” said CoinFund Chairman Christopher Perkins, who commented on the Journal’s reports via social media LinkedIn.

Joseph Guinan, CEO of FCM Advantage Futures, also commented on whether CME’s application is approved. Its entry into the futures brokerage space would not only be a game-changer, but also a dramatic concern for all FCMs (Futures Commission Merchants) if CME sets lower fees than these brokers.

A CME spokesperson also said the company’s commitment to the FCM model and strong risk management remains an unwavering benefit to all industry participants.

CME’s decision is a turnaround plan that follows a similar service offering proposal launched by FTX.US in April. CME’s plan is similar to FTX.US’ proposal to allow consumers to post margins and trade crypto derivatives directly on its platform.

In May, the Commodity Futures Trading Commission (CFTC) sought public comment on an application by FTX.US to amend its derivatives clearing organization (DCO) license to offer a new type of margin trading crypto to US retail customers.

Both CME Group and ICE opposed FTX.US’ proposal to offer central clearing of margin products directly to retail clients, which was championed by the crypto industry and the Futures Industry Association (FIA). ) – a global industry organization for listed futures, options and derivatives markets – during a congressional hearing. FTX US’s proposal was found to be flawed and poses a significant risk to market stability and market participants.

During May’s hearing before the House Agricultural Committee, U.S. lawmakers were skeptical of the FTX’s proposal for an automated collateral system to be used for crypto and other digital assets in futures markets.

Cryptocurrency derivatives traded on centralized exchanges reached $3.12 trillion in July, a monthly increase of 13%, as crypto prices maintain their efforts to recover from the recent market crash. The crypto market plunged in May and June as worries about Federal Reserve interest rate hikes and high inflation prompted investors to ditch risky assets.

In July, the derivatives market accounted for 69% of total crypto volumes, up from 66% in June, and helped lift overall crypto volumes on exchanges to $4.51 trillion in July. The increase in derivatives trading volume indicates an increase in speculative activity as traders believe there is room for further upside in the crypto rally.

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CME Group Offers Direct Trading Of Crypto Derivatives To Regulators


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