GCQ Flagship PIE Fund on CME Group Inc.
Thesis
GCQ added a small position in CME Group after the shares sold off on fears that perpetual futures could threaten its franchise. The fund characterizes CME as the monopoly derivatives exchange for US interest-rate products and equity-index derivatives. GCQ believes the competitive fears are misplaced, implying that the selloff created an opportunity to buy a high-quality market-infrastructure franchise. The thesis rests on the durability of CME’s liquidity, market position and exchange network effects.
“which had sold off on what we believe are misplaced fears of competition from perpetual futures products.”
Key risks
- Competition from perpetual futures products could prove more disruptive than GCQ expects.