ELX believes that any action by the CFTC to permit and foster portfolio margining between swaps and futures must promote competition among execution and clearing alternatives, and choice by market participants. ELX is against any discretionary action, such as the granting of a 4d order that would allow the CME Group to assure its ongoing monopoly power in futures, and develop monopoly power over the clearing of swaps.
CME controls over 96% of regulated futures trading and clearing. Given such dominance, the CFTC should ensure that portfolio margining systems not be used to prevent competition. In addition, any action by the Commission on this issue should be by rulemaking of general applicability and not by individual order or exemption.
In order to protect against the CME from gaining further monopoly power as a result of a new statutory scheme – something not intended by the "open access” provisions of the Dodd Frank Act – ELX strongly recommends that the CFTC not adopt a portfolio margining regime unless it adequately protects the ability of other exchanges and DCOs to adopt different market mechanisms for position transfers. including EFF transactions.
Full ELX comment letter