CME Group Calls On CFTC To 'Terminate' EFF Inquiry

CME Group Inc. (CME) called on the U.S. futures regulator to end an inquiry into the exchange operator's decision to bar customers from moving contract positions to a rival exchange.

The company also accused ELX Futures LP, which is pressing the issue in Washington, D.C., of mischaracterizing the issues to regulators and the public.

In a letter to the Commodity Futures Exchange Commission, General Counsel Kathleen Cronin reiterated that CME's reasons for prohibiting the transactions are backed up by the Commodity Exchange Act.

She cited an antitrust provision, noting that no exchange is obligated to adopt rules that result in "unreasonable restraints of trade."

The disagreement began in October 2009 when regulators approved ELX's Exchange of Futures for Futures, or EFF, rule that would let investors shift Treasury futures among markets.

ELX, a bank-backed venture that launched in July 2009, sees the rule as a way to weaken CME's domination of Treasury futures trade, where it accounts for 97.7% of the market.

CME later told members that such "transitory" trades are barred by the Commodity Exchange Act--but the CFTC last month rejected that argument, saying the CEA provides for similar transactions on other exchanges.

In the letter, Cronin wrote that ELX's argument essentially obligates CME to allow the transfer of customer positions from CME's markets to ELX "to foster the growth of ELX's business."

"Contrary to ELX's contention, it is well-established antitrust law that a refusal to assist a competitor is not an unreasonable restraint of trade," Cronin wrote.

CME shares were down 1.1% recently at $293.80.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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