US futures exchanges fight foreign rivals
Fri Jun 20,12:40 AM ET
By Vincent Boland in New York
The big two US futures exchanges began a campaign on Thursday to keep out foreign competition, urging Congress to impose strict criteria before granting international competitors a licence to establish operations in the US.
The campaign, by the Chicago Mercantile Exchange and the Chicago Board of Trade, is aimed at Eurex, the electronic marketplace controlled by Deutsche Börse of Germany, which has become the world's largest derivatives market.
Eurex has announced plans to establish a significant US presence to trade options and futures contracts. It recently signed a clearing agreement with the Board of Trade Clearing Corporation to process transactions in its new US marketplace, due to be launched in early 2004.
Opposition from the Chicago exchanges to the prospect of a trading licence for Eurex was expected.
The two on Thursday took their case to the congressional subcommittee on general farm commodities and risk management in hearings about the implementation of the commodity futures modernisation act, which opened the way for greater competition in trading commodity futures.
Without naming Eurex, Terry Duffy, CME chairman, said competition was welcome but that "no consideration was given to the question of foreign control of a US-based derivatives exchange", which could encourage hidden subsidies to gain market share and "abusive practices" such as paying customers to use its system.
Charles Carey, CBoT chairman, said: "The idea of foreign-owned US exchanges offering [US futures] products raises unprecedented public policy issues."
The CME and the CBoT are significant donors to political campaigns. They and Eurex are understood to have hired lobbying firms to put their cases to Congress. |
