The US Fixed Income Leaders Summit 2025 showcased the fierce rivalry in the US treasury futures space, between incumbent giant exchange CME and upstart rival FMX, as both exchanged jibes on the conference stage.
FMX is trading cash treasuries and has just begun to trade treasury futures, in the wheelhouse of futures exchange CME and its cash business Brokertec. The latter has recently seen volumes decline as CME futures grew.
Speaking at the conference, Terry Duffy, CME’s chairman and CEO “People say, you lost some of your business on Brokertec. I said I lost a lot of that business with Brokertec because I took it myself. I actually cannibalised my own assets because I futurised that business. I thought it was more it was more efficient in the futures market than it was on the cash side.”
Lou Scotto, chief executive officer of Fenics Markets Xchange (FMX), responding to an audience question at the same conference, said, “The question put to us is, Brokertec has declining market share in cash treasuries, what’s behind that and could it affect FMX in the same way? Well, I think we’re behind [the decline]. And the marketplace has now has a Treasuries landscape where there are four competitors in the market. We’re talking about a marketplace where we about US$170-200 billion a day match, and [Brokertec] is about US$100 billion. So they’re going to try to maintain that position. But as Andy Grove, the former CEO of Intel once said, “Success breeds complacency. Complacency can breed failure.”
He posited that the challenge that the CME would face, would be whether or not it can invest in its platform to make it more state-of-the-art.
“That’s their challenge,” he said. “We have every everything covered so we’re comfortable with our position. We think the other two competitors do a wonderful job and have a client base that gives them the opportunity to stay within the guidelines of what they want to be, which is a streaming platform rather than CLOB platform. We have the counterparty block, so we walk away from a lot of volume every day that is enjoyed by the CMEs Brokertec, but we’re very comfortable with where we are.”
Duffy, speaking later in the day, noted that the CME was in fact innovating on the technical level, introducing a new matching engine into its Aurora data centre to support greater integration between the cash and futures market.
“It’s going to be a matching engine that has a smaller notional value contract out there on the cash side, it’s going to have a smaller tick size and will help facilitate more people that like to trade futures versus cash in real time, right next to each other,” he said, “People trading large sums of cash can trade in our New York facility and people using futures and cash may want to use our Chicago facility. It gives the best of both worlds for different types of participants.”
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