On Wednesday, Piper Sandler showed confidence in BGC Group (NASDAQ:BGC) stock, as the firm raised its price target on the company's stock to $11.50 from $10.00, while maintaining an Overweight rating.
The adjustment followed remarks made by BGC Group's Chairman & CEO Howard Lutnick during today's earnings call, where he detailed the company's upcoming product launches and competitive strategy.
Lutnick announced that BGC Group's FMX is set to introduce SOFR futures contracts in September, with UST futures expected to follow in the first quarter of 2025. The launch is anticipated to ignite intense competition with CME Group (NASDAQ:CME) for a share of the interest rate futures market. Lutnick projected that by the third year following the launch, FMX should be well-positioned to contend effectively with CME.
The CEO also conveyed optimism about FMX's potential for rapid growth, suggesting that by the end of its first year, the exchange might achieve record open interest for a new platform.
This growth is expected as positions move to FMX, taking advantage of cross margin efficiencies against LCH's substantial $225 billion pool of proprietary interest rate swaps collateral. This strategic move by BGC Group appears to be a calculated effort to carve out a significant presence in the futures market space.
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