NYSE Euronext Sets Late March Launch For Rate Futures, Clearing

A new front in the battle for control of the biggest U.S. futures market will open March 21, when NYSE Euronext (NYX) will introduce a roster of fixed-income contracts aimed at the core business of CME Group Inc. (CME).

NYSE Euronext intends to introduce Treasury and Eurodollar futures by month's end, the exchange operator announced Wednesday, after a new clearing service underpinning the effort won approval from U.S. regulators.

The move sets up a three-way contest for heavily traded contracts linked to Treasury yields and key interest rates, with the incumbent CME already fending off a challenge from the bank-backed ELX Futures platform since July 2009.

"Today marks a historic day for competition and choice in the futures industry," said Walt Lukken, the former acting chairman of the Commodity Futures Trading Commission who is heading the clearinghouse venture backed by NYSE Euronext and the Depository Trust & Clearing Corp., in a statement.

NYSE Liffe U.S., the still-small futures platform that will harbor the contracts, on March 21 will introduce Eurodollar futures, a lookalike version of CME's benchmark product tied to the London interbank offered rate.

On March 28, Liffe U.S. plans to introduce futures linked to the yields of 2-year, 5-year and 10-year Treasury notes, as well as contracts on longer-duration government bonds, NYSE Euronext reported Wednesday.

Trades in the new markets will be cleared through New York Portfolio Clearing, a joint venture that seeks to reduce traders' cost of collateral by allowing customers to group together the margin posted against futures positions alongside that used for trades in cash Treasurys.

Initially, the function will be available only for proprietary accounts of firms that are members of both NYPC and the Fixed Income Clearing Corp. division of the DTCC, which handles trading in government securities.

NYSE Euronext shares were recently flat at $36.52. CME shares were down 0.5% at $304.92 after hitting a session low following the announcement.

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

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