The billionaire CEO plans to launch interest rate futures for stock market trading

• Billionaire CEO Howard Lutnick plans to launch a platform for trading interest rate futures, WSJ reported.
• The platform, called FMX Futures Exchange, would compete with contracts listed on the world's leading foreign exchange exchange, CME Group.
• “For the first time, there will be real competition in the world’s most valuable futures market.”

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Billionaire Howard Lutnick, CEO of Cantor Fitzgerald, is opening a new exchange to trade futures tied to U.S. interest rates, the Wall Street Journal reported.

The FMX Futures Exchange, which plans to launch in mid-2024, will list futures linked to US bond yields and the Secured Overnight Financing Rate (SOFR).

Most interest rate futures – about 99% of trading volume – are trading on the Chicago Mercantile Exchange today, WSJ said, citing FIA data. With a market capitalization of $73 billion, the exchange is now the most valuable stock exchange operator in the world.

That means Lutnick's venture would compete with the world's leading derivatives market. The FMX contracts would have to compete with the trillions of dollars worth of interest rate futures traded daily on the CME.

However, Lutnick believes the new exchange will have an edge over CME as it offers advantages such as lower trading costs.

Interest rate futures work like any other futures contract, allowing traders to bet on the direction of interest rates on everything from the 10-year U.S. Treasury to credit benchmarks like SOFR to the federal funds rate.

There have already been attempts to compete with the CME with an interest rate futures market – such as NYSE Euronext and ELX Futures – but the Chicago-based exchange is still in the lead. One initiative was led by Lutnick himself in 2013 when he launched Fenics UST, a treasury bond trading platform.

The Commodity Futures Trading Commission on Monday approved FMX's application to launch a new trading platform.

“With this CFTC approval, we will combine our leading Fenics UST Cash Treasury platform with our FMX Futures Exchange to provide competition across the CME’s U.S. interest rate complex,” Lutnick said in a press release. “For the first time, there will be real competition in the world’s most valuable futures market.”