Odd Lots The CME's Terry Duffy on the Big Risks He's Seeing Now
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May 15, 2023 Terry Duffy, Chairman and CEO of CME Group, shares insights on pressing market risks, including liquidity concerns in Treasury futures and the implications of the debt ceiling. He discusses the evolving landscape of interest rate hedging post-banking crisis and CME's expanding crypto offerings. Duffy also humorously touches on the historical debate surrounding onion futures while addressing the complexities of navigating market structures. Finally, he reflects on the CME's future role in Chicago amid changing economic challenges.
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Banking Crisis Impact
- The recent banking crisis primarily affected smaller banks, not the entire system.
- These smaller banks often misunderstood or mismanaged interest rate risk, leading to problems.
Farming and Hedging
- In the 1970s, struggling farmers were required by banks to have hedging programs.
- This promoted risk management in agriculture, potentially offering a similar model for banks today.
Treasury Futures Liquidity
- Treasury futures liquidity remains strong, despite occasional illiquidity during volatile periods.
- Perceived illiquidity is sometimes mistaken for volatility caused by unexpected events.