CFTC slaps down CME - ELX

Source: ELX Futures

ELX Futures, L.P. (ELX Futures), a new fully electronic futures exchange, received notification from the Commodity Futures Trading Commission (CFTC) staff that it had sent the CME Group a letter dated January 22, 2010 that it had "mischaracterized" the Commodity Exchange Act and found its arguments "unpersuasive" in informing market users in a self-certified market Regulatory Advisory notice issued October 19, 2009 that its rules do not permit the execution of the Exchange of Futures for Futures (EFF) Rule and users would be subject to disciplinary action.

Neal Wolkoff, Chief Executive Officer of ELX Futures, said, "We commend the CFTC staff for its findings that EFF transactions are consistent with the requirements of the Commodity Exchange Act. This view is consistent with our position all along. Any further effort by the CME to thwart the EFF Rule will carry with it an unbearable weight of anti-competitive intent. The CFTC's Core Principle 18, which prohibits an exchange from 'imposing any material anticompetitive burden on trading,' imposes a duty that is independent of the U.S. antitrust laws. If there truly were a market purpose - as opposed to an anti-competitive intent - to disallow the EFF, the argument would have been made already."

The application from ELX Futures was submitted on July 6, 2009 through September 17, 2009 and approved by the CFTC on October 6, 2009.

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