(Bloomberg) -- Howard Lutnick is lining up some of Wall Street’s biggest power players for a fresh challenge to the behemoth of futures trading and interest-rate derivatives, CME Group Inc.

The chief executive officer of Cantor Fitzgerald got backing from Bank of America Corp., Barclays Plc, Citadel Securities, Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Jump Trading as he prepares to launch his new futures exchange. The firms invested $172 million for a 25.75% stake in FMX, which increases as they use the platform. The business is part of BGC Group Inc., a brokerage spun off from Cantor Fitzgerald in 2004 and led by Lutnick.

By bringing in notable names in finance as investors, Lutnick said he hopes to create value for the venue before it’s even launched. The backers also include Morgan Stanley, Tower Research Capital and Wells Fargo & Co., which signed on to become minority equity owners of FMX, valued at $667 million.

“When George Clooney bought a tequila company, the tequila was the tequila,” Lutnick said in an interview, comparing the consortium of backers with the movie star. “The day after he bought it, it was worth 10X. My exchange is now worth more.”

For years, the sector has been dominated by Chicago-based CME, which runs futures markets for commodities including wheat and biofuels. Traders can also use futures contracts to hedge against swings in prices or bet on Federal Reserve policy. CME handled more than 99% of trading volume in interest-rate futures on US exchanges in 2023, according to data from the Futures Industry Association. Cboe Global Markets Inc. has corporate-bond futures offerings, while Intercontinental Exchange Inc. has its own futures products.

Lutnick’s FMX Futures exchange is expected to launch in September, with plans to first list futures linked to the Secured Overnight Financing Rate, or SOFR, a benchmark short-term rate, then Treasury yields. Those futures will compete directly with contracts on CME, which has seen record volumes thanks to uncertainty around future Fed interest-rate decisions, inflation and geopolitical tensions.

“We are ready and able to compete with anybody and, you know, competition is something that has made CME what it is today,” CEO Terry Duffy said on an earnings call in October when asked about FMX’s planned launch. “We think we have a very strong, powerful, compelling offering for our clients.”

Trading venues benefit from market volatility, with greater activity resulting in more commissions for exchanges. Unlike cash markets, where there’s a cap on the value traded, derivatives markets can grow by a greater amount, based on investors’ perceived value of a commodity.

But in FMX’s case there’s also a financial incentive for the group of backers. After purchasing a stake, they can keep an additional 10.3% if they help meet certain volume targets.

Read More: CME Climbs on Record Profit Driven by Interest-Rate Uncertainty

Lutnick, for his part, said he’s ready to go head to head with the industry leader.

“The CME is the heavyweight champ, there’s no doubt. They say bring it on,” Lutnick said. “We’re getting good shots in on the champ.”

For now, CME is the giant in the sector, with a market capitalization of roughly $77 billion, while BGC’s is $3.99 billion. FMX’s cash US treasury platform, FMX UST, ended the first quarter with a market share of 28%, up from 26% in the previous three months, the company said.

Lutnick has spent his entire career at Cantor Fitzgerald, joining the firm out of college in 1983. He quickly rose through its ranks, and became CEO in 1991. He was head of the company in 2001, when its headquarters in the World Trade Center was destroyed in the Sept. 11 terrorist attacks and Cantor lost 658 of its 960 New York-based employees. Lutnick, who was taking his son to his first day of kindergarten that morning, rebuilt the firm in the years that followed.

FMX isn’t Lutnick’s first attempt at breaking into the interest-rate futures business. He backed one in 2009, ELX Futures, which was billed as a low-cost alternative, electronic trading platform. Though it was backed by Wall Street firms including JPMorgan and Citigroup, along with Lutnick himself, it failed to gain traction or put a dent in CME’s business.

That’s partly because it lacked a connection to an established clearinghouse, which offers the plumbing that holds collateral for trading firms and moves cash to settle trades. Beyond the market where traders buy and sell futures, CME also owns and operates a clearinghouse that the majority of traders are connected to.

Clearinghouse Deal

For a competitor to succeed, it would need to convince industry players to post collateral in two separate places, since trading firms are unlikely to abandon CME completely in favor of an untested newcomer. To address that issue, Lutnick struck a deal to clear FMX’s futures trades through LCH, the clearinghouse owned by London Stock Exchange Group Plc. As one of the largest clearinghouses in the world, LCH is already used by many of the banks that clear trades in interest-rate swaps.

Lutnick has already had success in shaking up trading. His eSpeed venue went live in 1996, helping fuel an electronic-trading revolution in Treasuries. Nasdaq Inc. bought the business in 2013. After his non-compete agreement expired, Lutnick created another market for trading government bonds called Fenics. That venue has doubled its volume in the past five years, and electronic trading now accounts for a quarter of parent BGC’s revenues.

Read More: Lutnick’s BGC Gets Nod for US Interest-Rate Futures Exchange

Banks and high-speed trading such as Citadel Securities that are already plugged into Fenics are natural users of the new futures exchange since they won’t require additional on-boarding, according to Lutnick. The cost of trading on FMX also will be lower than through CME, he said.

“CME is one of the great monopolies of America,” Lutnick said. “While they provide a great service and a great product, they charge an equally spectacular price.”

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