Billionaire Howard Lutnick, CEO of Cantor Fitzgerald, is gearing up to launch a new exchange. The FMX Futures Exchange, set to debut in mid-2024, will specialize in trading futures linked to US interest rates, including US bond yields and the Secured Overnight Financing Rate (SOFR).

This venture places Lutnick directly in competition with the Chicago Mercantile Exchange (CME), the current behemoth in the interest-rate futures market. With about 99% of trading volume in this sector, the CME stands as the world’s most valuable exchange operator, sporting a market cap of a whopping $73 billion.

Lutnick’s FMX, however, is not daunted by the challenge. The new exchange aims to carve its niche by offering advantages such as lower trading costs, a significant lure for traders in this domain. Interest rate futures, which allow traders to speculate on the future direction of rates for various benchmarks, are a critical tool in financial markets.

The road to establishing an alternative to the CME is not untraveled. Past attempts to create a rival market for interest-rate futures, including initiatives by NYSE Euronext and ELX Futures, have seen limited success. Lutnick himself spearheaded a similar effort in 2013 with the launch of Fenics UST, a platform for trading government bonds.

However, with the Commodity Futures Trading Commission’s recent approval of FMX’s application, Lutnick is poised to introduce what he describes as “real competition” to the CME’s dominance in the U.S. interest rate market. His vision is to combine the capabilities of the Fenics UST cash Treasury platform with the FMX Futures Exchange, potentially offering a comprehensive and competitive alternative in the world of futures trading.

For investors and entrepreneurs, Lutnick’s latest venture represents a potential shake-up in the financial markets. It underscores the dynamism of the financial industry, where innovation and competition continually drive evolution. As the FMX Futures Exchange prepares to enter the market, it invites keen interest from market participants eager to see how this new player will influence trading strategies, costs, and the broader financial landscape.