Even as its membership prices continue falling, the Chicago Mercantile Exchange is getting a rare break.
An expedient deal that the Merc made earlier this year to upgrade its Globex electronic trading system could end up helping the exchange distribute its contracts throughout Europe.
In the agreement, signed June 5, the Merc swapped its Clearing 21 software for the French NSC electronic trading system developed by the SBF-Paris Bourse.
Now that the French Matif and the German DTB are joining forces to offer futures electronically over one screen, the NSC system has a good chance of becoming the standard for trading in Europe.
That could give thousands of additional traders convenient access to Merc products. “Whatever we decide to put on Globex will be available on-screen in Europe,” said Merc Chairman Emeritus Leo Melamed.
The European merger also could boost Clearing 21, the Merc’s system for matching and guaranteeing trades. The Merc is promoting Clearing 21 as the best platform for unified clearing in Chicago. “The momentum is in the right direction,” said Merc Chairman Jack Sandner.
The same can’t be said for Merc seat prices, though. A full membership sold Monday at $425,000, down a half-million from a peak of $925,000 in 1994. The bid has fallen to $400,000.
Soy ploy: Tempers are flaring at the Chicago Board of Trade over its federal regulator’s decision to reject proposed delivery terms for soybean and corn contracts.
The Commodity Futures Trading Commission’s counterproposal to include Toledo as a delivery point for soybeans is being cited as a dealbreaker.
Since the Ohio city is an inconvenient spot for exports, beans in storage there usually command a lower price. But the CFTC wants to make Toledo a delivery point at par–the same price as in Chicago. The powerful Ohio congressional delegation sought the change.
Toledo at par may well be a mistake. But the real issue for CBOT members is the CFTC’s decision to interfere at all.
While the law provides for review, exchange members can hardly believe the CFTC is pushing them around on an issue as close to their hearts as contract specifications.
“They have no business dictating what our contract specs should be,” said soybean trader Jake Morowitz. “It is such an obvious case of caving in under political pressure, it’s unbelievable.”
Morowitz’s solution: “They should disband.”
New blood: Just in time for the next round in the delivery fight, the new director of the CFTC’s trading and markets division started work Monday. I. Michael Greenberger, an attorney with Washington firm Shea & Gardner, replaced longtime director Andrea Corcoran. Corcoran has taken over a newly created international-relations post at the agency.
Merge surge? The DTB-Matif plan to merge onto one trading system is attracting plenty of interest from smaller exchanges in Europe. The Swiss Soffex had signed on with DTB in the original deal. The Austrian Futures & Options Exchange could join next, with Spain and Italy not far behind, sources said.
As for merging Chicago’s exchanges, which the Merc’s Sandner proposed last month, expect a longer wait, said Michael Braude, president of the Kansas City Board of Trade.
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“Northern Ireland and England will merge about the same time,” Braude predicted.
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