The battle between CME Group and ELX Futures over exchange of futures for futures should not be happening, argues Philip McBride Johnson. ELX is simply trying to free-ride on CME’s liquidity.
A funny thing happened recently in the name of “competition”. ELX Futures, founded in late 2007 by some of Wall Street’s biggest firms, effectively sat down and wrote the equivalent of the following resolution:
RESOLVED, that effective immediately, the Johnson family shall have full and unfettered access to their neighbour’s swimming pool.
And, without the consent of, or even consultation with, that neighbour.
In reality, ELX adopted a “rule” that purports to allow US Treasury futures created on the Chicago Board of Trade simply to be transferred to ELX through a non-competitive “exchange of futures for futures”.
The CBOT has said “no”.
At this point I must declare:...