The Chicago Way

Earlier this week, I was in Chicago catching up with friends and contacts in the futures industry and getting reacquainted with the cool breeze off Lake Michigan. Everyone I met in the Windy City seemed eager to attend the Futures Industry Association's (FIA's) annual meeting in Boca Raton, Fla., later this month.

I'm sure a lot of the discussion will be about the Dodd–Frank Act, margining requirements and other issues. However, the biggest gossip sessions will be on how Chicago Mercantile Exchange (CME) operator CME Group reacts to the planned acquisition of NYSE Euronext by Deutsche Börse. If it does indeed go ahead—and it’s far from a done deal at this point—it would mark the German futures exchange operator's second attempt to crack the US markets. Its first try, Eurex US, basically flamed out after concentrated resistance from the local markets.

This past week we have seen another salvo in this CME–Deutsche Börse competition as CME officials announced at the start of the week the creation of a new clearing membership class, the financial instrument clearing membership (FICM). It will provide margin offsets up to 65 percent to qualified firms that trade US Treasury securities and interest rate futures traded on the CME, according to exchange officials.

This came just a couple of days before NYSE Liffe US announced the launch of its New York Portfolio Clearing (NYPC), a joint clearing venture with the Depository Trust & Clearing Corp. (DTCC), which will clear Eurodollar futures and US Treasury products in the coming weeks.

As Deutsche Börse's purchase of NYSE Euronext comes closer to its finalization, we can only expect to see more blow-for-blow announcements happening among these exchanges.

Share your thoughts on the topic with me at rob.daly@incisivemedia.com.