UPDATE: CME Rival ELX To List Fed-Funds Futures By End Of 2010

ELX Futures LP, launched less than a year ago, is extending its battle to take market share away from CME Group Inc. (CME), the world's largest futures exchange.

ELX will list federal-funds futures, mirroring CME's fed-funds contracts, by the end of this year, ELX Chief Executive Neal Wolkoff said Thursday.

The exchange, which made its debut last July, also intends to launch options tied to its entire interest-rate complex by year's end, said Wolkoff.

CME maintains the overwhelming share of U.S. interest-rate derivatives trading, offering futures and options contracts tied to long-term and short-term rates.

So far this month, ELX has garnered about 3% market share on 2-year, 5-year, and 10-year Treasury notes, 30-year Treasury bonds, and on "ultra" long Treasury bonds--all identical to CME's product line.

ELX's Eurodollar futures, just like CME's product, will be tied to the cost of borrowing dollars in the London interbank market. They are scheduled for launch in the second quarter of this year.

ELX is also developing options, which enable traders to hedge or offset futures positions. That in turn will help ELX build open interest in the futures, said Wolkoff.

Open interest, a measure of market liquidity, refers to positions that are not offset overnight.

ELX is run by a consortium of trading firms, banks, and technology firms, pledging a cheaper trading alternative to CME.

ELX leaders "haven't looked yet" at creating original products that don't mirror CME, Wolkoff said.

"We're not going to deviate from what the market is used to," Wolkoff also said.

Meanwhile, the chief executive for NYSE Euronext's (NYX) U.S. derivatives unit said Wednesday that Treasury, Eurodollar, and fed-funds futures are "all on the table" for possible inclusion when its new clearinghouse opens for business in July.

The clearinghouse venture between NYSE Liffe U.S. and New York Portfolio Clearing will have the capacity to meld futures and cash positions in a single clearing entity, said NYSE Liffe CEO Tom Callahan.

NYSE Liffe, currently operating futures markets in stock indexes and metals, opened in 2008.

-By Howard Packowitz and Jacob Bunge, Dow Jones Newswires; 312-750-4132; howard.packowitz@dowjones.com

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