http://www.suntimes.com/business/roeder/1243213,curious-102608.article Lucrative deal in works of CME October 27, 2008 BY DAVID ROEDER Financial regulation in Washington is a jumble, as Congress and the bureaucrats kick around ideas for putting freewheeling credit default swaps under somebodyâs control. CME Group (CME), owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, has center stage in the negotiations and is liable to benefit hugely from regulatory change. But nothing comes cheap in Washington. CME probably will win government blessing for its push to bring the $55 trillion credit default market under its wing. In return, it may need to give up two of its longheld lobbying views. As a tradeoff for collecting fees on these new contracts, CME probably will have to accept the Securities and Exchange Commission as its new overlord. It always wants to stay answerable to the Commodity Futures Trading Commission, a friendlier agency. The two went to bat for each other a little too eagerly in the controversy over speculatorsâ alleged role in high gas prices. As Congress drafts a new regulatory regimen, centralizing control of financial markets under the SEC looks logical and easy. Several members are talking that way, and SEC Chairman Christopher Cox gave that viewpoint a helpful push Thursday, endorsing a takeover of the CFTC. With that would come the second challenge for CME, a new futures transaction tax. The SEC funds itself with a securities transaction tax, so the proposal has a precedent. Besides, Congress will be casting about for ways to pay for that $700 billion bailout. Let Wall Street pay for its rescue. Accepting the tax will be a hard concession for the CME. But if the proposal comes out, CME should ask its big guns in the Illinois congressional delegation to withhold their fire. A new regulator and a new tax is a fair price for a license to enter a lucrative line of trading.