The Futures Industry Association has been asked by market participants to clarify its views on the proposed merger of the Chicago Mercantile Exchange and the Chicago Board of Trade. The CME and CBOT are the two largest futures exchanges in the United States, representing over 85% of the market in U.S. futures exchange trading. FIA is issuing this statement to present its position on the competitive implications of this major transaction.
For many years, FIA has expressed its concern about the lack of meaningful competition among U.S. futures exchanges and their clearing facilities. To address this situation, FIA has championed the entry of new U.S. exchanges and clearing facilities as well as the creation of new U.S. market structures.
Recently, FIA has considered these issues in light of the proposed CME-CBOT merger. FIA acknowledges that the merger could have short-term cost savings and operational efficiencies. In FIA’s view, however, the CME-CBOT merger would concentrate significant market power in the new CME Group, substantially lessen competition among U.S. futures exchanges, and raise even higher the barriers to entry for new competitors. FIA understands that various market structure alternatives could potentially overcome the anti-competitive effects of the merger and is considering internally the efficacy of those alternatives as well as their impact on the long-term competitive landscape of the U.S. futures markets.
