U.S. groups nag CFTC as Eurex approval drags on
Mon January 26, 2004 05:11 PM ET
By Ros Krasny
CHICAGO, Jan 26 (Reuters) - Seven U.S. financial industry groups urged regulators on Monday to approve Eurex's bid for a U.S. futures license without further ado, and hinted they are ready to shift to the new exchange.
German-Swiss Eurex, the world's largest futures exchange, hopes to start the engines at Eurex US on Feb. 1. But the Commodity Futures Trading Commission has not ruled on the application, which was filed on Sept. 16, and it has until mid-March to do so.
"Our members and other end users are ready to trade," said a letter signed by the Futures Industry Association, the Bond Market Association and five other groups.
Eurex US plans to trade futures and options on U.S. Treasury securities identical to those at the Chicago Board of Trade, the No. 2 U.S. futures exchange.
Monday's letter said the imminent "roll" of open interest in Treasury futures from the March contract to the June contract "makes prompt action on the application by the CFTC particularly important."
The comment suggests the companies plan to shift at least some of their positions in Treasuries to the all-electronic Eurex US from the CBOT when establishing June positions.
CBOT's March Treasury contracts stop trading on March 20, but firms are starting to shift out of the March contract. That process typically takes a few weeks.
On Friday, open positions in CBOT's benchmark 10-year Treasury note futures contract dropped by 43,236 in March and rose by 9,768 in June.
If the Treasury positions are not shifted during the March "roll" it will limit Eurex's ability to build volume and liquidity on its new exchange for several months.
Several of the investment banks and large trading firms who are prominent members of FIA and the other groups recently made financial commitments to Eurex US, investing in the new exchange in return for trading fee credits.
That plan, announced Jan. 15, was submitted to the CFTC for review, giving regulators another element to consider in what has become a contentious approval process.
Other trading companies have become part of Eurex US through the decision to acquire BrokerTec Futures Exchange, the defunct U.S. exchange owned by big Wall Street firms.
BrokerTec's owners will receive a 20-percent equity stake in Eurex US and will get to name three of the new exchange's 12-member board. |
