Some top commodity brokerage firms are gearing up for what is promising to be the next front for AI trading: the buying and selling of derivatives tied to the cost of renting computing power used to develop and run artificial intelligence.

By Lucia Kassai and Lorelei Smillie Companies including ADM Investor Services, BGC Group Inc and Nanhua USA LLC are preparing for possible approval by the Commodity Futures Trading Commission of compute futures trading in the US. The firms sit between the exchanges and customers, executing orders for hedge funds, commodities traders, commercial companies and other institutional investors.

Brokerage firms are eyeing the potential of hyperscalers, data-center operators, AI developers, and cloud providers seeking to hedge the volatile costs of compute and opportunities to arbitrage the price of power and natural gas used in electricity generation against compute.

The emerging compute market has already brought a new class of customers to Nanhua USA LLC,a regulated futures broker and clearing firm that is the US arm of China’s Nanhua Futures Co. Ltd.The customers are “more tech related,” said senior business development manager Greg Adamsick.

ADM Investor Services,or ADMIS, the futures brokerage and clearing arm of Archer-Daniels-Midland Co., is weighing whether to beef up its research capabilities with new headcount to help clients, the company said in a statement. BGC Group, also a futures brokerage firm, created a new division in June to cater for the secondary market for compute and memory capacity, including real-time risk management.

“There’s definitely going to be significant interest for it from those looking to hedge,” said Zach Espinosa, co-head of compute infrastructure markets at BGC Group. “Our view is any form of standardization is positive for liquidity.”

The race to trade computing power contracts is being met with growing unease in the stock market, where concerns over the costs of building out AI infrastructure are battering shares tied to the sector.

Still, there are signs that the enormous spending on computing power can generate healthy returns. Anthropic PBC’s compute margin, or the revenue left over after subtracting the cost of its computing power and other necessary infrastructure, is more than 40%, Bloomberg earlier reported.

Compute futures hit a regulatory road block in August, when the CFTC blocked exchanges from listing compute products until a comment period on the products has been completed.

Kalshi Inc. took down yes-no bets on compute as a result of the regulatory scrutiny.

Exchanges want to launch compute futures in a bid to establish their contracts as the industry benchmark, potentially unlocking millions of dollars in trading volume. CME Group, Intercontinental Exchange Inc., and upstarts Nodal Exchange Holdings, LLC and Architect Financial Technologies are waiting for regulatory approval to bring their products to market. CME’s Peter Keavey says it’s hard to estimate how big the compute market can get.

“What we know is that the level of leverage and financial risk in the build out of this industry is very large and needs risk management tools,” Keavey, who is the global head of energy and environmental products, said.