Bloomberg Talks
00:02:51 · Scarlet Fu, Terry Duffy, S3
[00:02:51] S0: That's how people manage risk. You cannot do that in a perpetual. [00:02:55] S2: So 94 percent of my business is institutional driven. What they are creating is strictly, strictly retail-focused contracts, and they don't have a natural buyer or a natural seller. They are just retail-driven contracts for speculation and speculation only. [00:03:13] S3: Terry, what about the Commodity Markets Council, the CMC? They've asked the CFTC to crack down on U.S. retail traders using VPNs to access offshore exchanges, but oil perps are already trading at a significant volume in the likes of Binance and Hyperliquid. Do you think that prices on those offshore contracts are influencing maybe the price discovery on CME? [00:03:34] S2: Well, I don't think it's having an impact on the price discovery right now, but who's to say it can't? These contracts in the United States, first of all, you're not supposed to be allowed to trade these offshore contracts on a VPN, and there's nobody to police it. So if there is, they haven't explained to us how they are policing it, and people are getting access to these offshore markets. Now, these offshore markets that trade on these DeFi platforms, they also carry with them leverage that is. [00:04:03] S0: Absolutely extraordinary leverage where you.
00:04:03 · Scarlet Fu, Terry Duffy, Scarlet Fu
[00:04:03] S0: Absolutely extraordinary leverage where you. [00:04:06] S2: Could have a cascading of events, Scarlet, whether it's up or down, depending on which way the market's going, because of the auto liquidation process that happens associated with these DeFi markets. And also in a DeFi market, if there is a default, what they do is they tear up the winning side of the trade to pay off for the losing side of the trade. There is no waterfall associated with these contracts. So again, these contracts are small to begin with. They're 100% retail focused. [00:04:35] S0: I'll say it again. [00:04:36] S2: My business is 94% institutional business. The question is, why are we allowing these contracts to trade with U.S. [00:04:44] S0: Participants trading them? [00:04:45] S2: And if so, why are you not allowing me to have a 24-7 oil contract, even though it's a small 10-barrel oil contract, in order to move forward? So eventually I pulled that contract, as you know. I talked to my commercial participants. They didn't think it was worth it. listing it. [00:05:01] S0: But again, the CFTC was an obstacle in that process. [00:05:06] S1: I know that you are troubled by people in the U.S. trading on markets through a VPN that is illegal for U.S. participants to trade on. What would a crackdown on U.S. traders who are using VPNs to access offshore trading look like from where you sit? [00:05:21] S0: I don't know. [00:05:22] S2: I think that's up to the United States government to make that decision. I didn't make the rules. [00:05:25] S0: They did.
00:05:25 · Scarlet Fu, Terry Duffy, S3
[00:05:25] S0: They did. [00:05:27] S2: So, again, this is not a CME rule. This is not a rule from the New York Stock Exchange or NASDAQ. [00:05:34] S0: This is a government rule. So they have to. [00:05:36] S2: Tell me what it's going to look like because I don't know. So I'm curious as much as you ask the question. I'm curious about the answer myself. I don't know the answer to it. [00:05:47] S3: Definitely a tricky situation. Terry, thank you so much for joining us. That's CME Group CEO and Chairman Terry Duffy.