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The Chicago Exchanges vs Eurex US



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Code : ITF0010

Year :
2004

Industry :Banking, Insurance and Financial Services

Region : :USA

Teaching Note:Not Available

Structured Assignment : Not Available

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Introduction: OnOctober 16th 2003, Chicago Board of Trade (CBOT) in its ‘Final Comment letter’ to Commodities Futures Trading Commission (CFTC) wrote that the commission should not approve Eurex US’ application for contractmarket designation, as the applicationwasmaterially incomplete4 . On November 6th 2003,ChicagoMercantile Exchange Inc. (CME) Chairman Terry Duffy said, “CMEwelcomes competitors who share our commitment to amarket structure that puts the interest of the investing public first. There are two important tests that every exchangemustmeet before it can claimto be operating in public interest. Itsmarket structure and trading rulesmust be open and transparent, and theremust be equitable treatment of all transactions.”Duffy noted, “CME is concerned about the EurexU.S. application, which omits any information regarding the exchange’s plannedmeans andmethods of operations. It is so devoid of real information that it fails to specify the contracts that will be traded. Now that the time pressures of the fast track approval process have been removed, we believe that a critical examination of . . . aspects of Eurex’s proposed plan is in order.”

The later half of 2003 was marked by such bad temper and piqued campaign by the Chicago exchanges that they effectively lostmost support beyond the frontiers of Illinois. Initially themedia and the AmericanCongresswere divided into two camps supporting the rival parties, the Chicago Exchanges and the Eurex. But the US businessmedia smelt an oldfashioned closed cartel and launched some serious attacks on the Chicago exchanges. Soon the Chicago exchanges realized that they were fighting a losing battle and so they changed the battlefronts.

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