Eurex Threatens To Bring More Friction To The Futures Markets
Thursday, November 06, 2003PAUL KANGAS: The world`s largest futures exchange came under fire today on Capitol Hill. In a hearing before a congressional committee, officials from the German and Swiss owned EUREX told lawmakers about plans to start trading in the United States. But Chicago`s two futures exchanges say the EUREX wants to break the law and steal their business. As Diane Eastabrook reports, today`s fireworks cap off a week of bitter feuding that`s rocking the futures industry.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: A cordial panel discussion with futures exchange leaders dissolved into bickering about everything from market access to product pricing before a packed house at the Futures Expo in Chicago this week.
UNIDENTIFIED MALE: We have another disagreement here. I think we should move on.
(LAUGHTER)
UNIDENTIFIED MALE: To another disagreement?
UNIDENTIFIED MALE: How about another question?
EASTABROOK: What triggered the debate is a plan by German/Swiss-owned EUREX to trade U.S. futures products. The European exchange is setting up offices in the Sears Tower, just blocks from both the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade. If it gets regulatory approval, the all-electronic EUREX could begin trading many of the products the Chicago exchanges have been trading exclusively.
RUDOLPH FERSCHA, CEO, EUREX: We very much believe that we should have the opportunity to deliver our services in a level playing field and in accordance to the rules here in the United States.
EASTABROOK: But the Chicago exchanges aren`t welcoming EUREX with open arms. The Merc and the CBOT claim EUREX wants to steal their business by purchasing orders. They also claim the European exchange has withheld information in its application to the Commodities Futures Trading Commission.
CRAIG DONOHUE, CEO, CHICAGO MERCANTILE EXCHANGE: We don`t know how they are going to effectively regulate activity in their markets, how they are going to provide market supervision, and enforcement of their rules.
EASTABROOK: EUREX denies those charges and has fired back by filing an antitrust suit against the Chicago exchanges. The Futures Industry Association doesn`t want to take sides, but thinks more competition will benefit investors, and could also benefit the U.S. exchanges in the long run.
JOHN DAMGARD, PRES., FUTURES INDUSTRY ASSOCIATION: We would like to see the Chicago exchanges offer the same products that are traded on the German exchange or the French exchange. We believe that that level of competition is lacking, and we think, you know, going forward that competition is necessary for the customers to get the best price.
EASTABROOK: The CFTC has taken the EUREX application off the fast-track and is taking a closer look at it, but many industry experts believe the European exchange will be cleared to trade in the U.S. early next year. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Chicago.
