An antitrust lawsuit filed by Eurex US against the Chicago Mercantile Exchange and Chicago Board of Trade can proceed after a US Federal Court judge rejected a motion to dismiss the claim.
The suit, originally filed by the Swiss German derivatives exchange in October 2003 and updated in March this year, alleges that the Chicago exchanges illegally attempted to block Eurex's entry to the US market.
Eurex accuses Cbot and CME of violating the Sherman Act by lowering their transaction fees to "predatory levels" just prior to the launch of its US futures exchange early last year.
Eurex is also alleging that the two Chicago exchanges made "material misrepresentations" to members of Congress and the Commodity Futures Trading Commission and attempted to block the National Futures Association (NFA) from providing regulatory oversight functions.
Judge James Zagel of the Northern District of Illinois declined to dismiss the suit, saying that the characterisations made in defendants' briefs are as close to the border of being misrepresentations as it is possible to come without crossing it.
A Cbot spokeswoman told reporters that the exchange continues to believe the lawsuit is without merit, while a CME spokesman said the exchange intends to fight the suit vigorously.
Eurex launched its Chicago-based futures operation in Februrary 2004 but has struggled to compete against Cbot and CME and has failed to capture a significant share of the market in US Treasury futures. In May 2005, treasury volume on Eurex US was rumoured to be less than one per cent of that in comparable Cbot contracts. Eurex US has now decided to focus its efforts on currency futures, starting in September.
But recent speculation suggests that the future of the US unit is in the balance. Earlier this month Eurex refused to comment on reports from German newspaper Handelsblatt that the US unit is likely to be closed in its present form, although a Eurex spokesman told Reuters reporters that the exchange is reviewing the unit's prospects.