CME Group Analyst Turns Bearish On 'Credible' Competitor's Market Entry: FMX Exchange's Partners Are 'Frustrated'

Shares of CME Group Inc CME tanked in early trading on Friday, on the heels of alleged insider selling.  

FMX Exchange is entering the U.S. interest rate futures market. It will likely compete with CME Group in its flagship futures contract, according to JPMorgan.

The CME Group Analyst: Kenneth Worthington downgraded the rating for CME Group from Neutral to Underweight, while reducing the price target from $206 to $187.

The CME Group Thesis: FMX Exchange has a set of partners who are "frustrated with CME's behavior as a monopoly, and some of them are the company's biggest customers in rates trading,” Worthington said in the downgrade note.

Check out other analyst stock ratings.

FMX Exchange has "the most compelling offering to date," supported by its state-of-the-art technology, powerful partners, and a strong value proposition that includes lower commission and competitive portfolio margining, the analyst stated.

"We think success will ultimately be determined by how liquidity develops over time and if FMX can win over the asset manager participants, which are likely CME's most sticky customers," Worthington wrote. "Based on the potential risk of a credible new entrant competing with CME in its core Interest Rate franchise, we are downgrading CME to Underweight," he added.

CME Price Action: Shares of CME Group had declined by 1.76% to $194.99 at the time of publication on Tuesday.

Now Read: US Private Sector Activity Exceeds Estimates, Fastest Growth In 2 Years – Will The Fed Welcome The Data?