Marex clears first trade on FMX US treasury futures market

Marex has cleared the first trade on FMX Futures Exchange, the much-awaited US treasury futures platform that launched on Monday to challenge CME Group’s dominance in the world’s biggest debt market.

London-based and New York-listed Marex said on Tuesday it cleared the first trade on FMX Futures Exchange, which is backed by BGC Group, the US financial group, and a consortium of banks and market-makers.

FMX Futures launched on Monday with a three-month Secured Overnight Financing Rate (SOFR) futures contract, pitching the new venue in direct competition with CME Group, the Chicago-based group that dominates US treasury futures trading.

FMX Futures, which clears through London-based LCH, plans a subsequent launch of US treasury futures, including a longer-dated contract, in “the first quarter of 2025”.

Marex said late on Tuesday, the group’s membership of FMX extends the US product offering for clients, complements Marex’s over-the-counter swaps clearing service and opens up “further opportunities with LCH”.

BGC is launching the platform to allow clients to trade US treasury and SOFR futures alongside the US government bonds they already trade on FMX’s UST platform.

The rationale is trading US treasury futures with FMX Futures and clearing them through LCH will deliver savings because the futures can be cross-margined against the US interest rate swaps already cleared at LCH.

BGC chair Howard Lutnick said on Tuesday: “This is the first US interest rate futures exchange to launch with a fully operational, globally connected, state-of-the-art trading system, along with enormous capital savings driven by the LCH's cross-margin capabilities.”

The US interest rate market has seen strong volumes in recent months, with CME last month reporting record SOFR futures open interest of 12.7 million contracts on August 28.

The Chicago-based group traded 469 million lots of three month SOFR futures in the first seven months of this year, making that contract CME's most popular short-term interest rate future.

BGC in April unveiled 10 partners who had invested a combined $172 million (137.5m) for a 25.75% stake in the business. The total could grow by an additional 10.3% if volume targets are met, according to a presentation published at the time.

This group includes Bank of America, Barclays, Citadel Securities, Citi, Goldman Sachs, JP Morgan, Jump Trading Group, Morgan Stanley, Tower Research Capital and Wells Fargo.