CME Group just wants to safeguard the integrity of the U.S. Treasury market. ELX Futures LP is simply asking for access to one of the world's most stable clearinghouses. According to industry analyst Sanford C. Bernstein & Co., CME Group had better blink soon; otherwise, it's facing a possible federal anti-trust probe.
Supporting the case of ELX are to be two federal opinions. One, which came down in 2008 from the Justice Department, said that futures clearinghouses were structured in an anticompetitive fashion. CME Group owns both the exchange and the clearinghouse that clears its trades.
More recently, this January, the Commodity Futures Trading Commission said that the trades would indeed be legal. CME Group is standing firm.
The exchange argues, because the prices and specifications of ELX contracts are effectively similar to the more-established products at CME Group, the upstart's products bring nothing new to the table. Also, by clearing the ELX contracts, they would merely allow “arbitrary movements of large blocks of open interest without any legitimate transaction” – in short, permit wash trades that merely create the appearance of legal trades.
ELX Futures LP is owned by Wall Street banks and hedge funds.
- CME Risks Antitrust Probe in Dispute, Analyst Says
