These seem to be tanking off the DOJ saying they would like to see clearing and exchanges separate. Seems to me to be a severe overreaction, even if they could block the merger, which they haven't said they would try to do, as far as I know.
from what i gather, it has less to do with the merger and just an interest in opening up the mkt to more competition... wonder who is lobbying the DOJ, eh? regardless, i wonder if CME would just spin off their clearing operation in response to this? Why on earth anyone would want fragmented exchanges to trade interest rate futures on ? it seems impractical (which are of interest to them)... You just end up with lower volume markets with higher slippage and spreads instead. I guess someone wants a piece of the CME pie and they don't like monopolies. In that case, the govt should buy the CME and turn it into a nonprofit org with free commissions.
ICE is quietly in the same position as a clearing house and look at it's chart as it's been massacred. Ironically, I was just thinking how much the CME charges to clear trades and it's huge. The prospect of losing that business is sure to cause panic, and if there's a real probability of it happening we'll see it reflected in the price before the news hits. Don't think the Goldman's of the world aren't wired into these situations with their tentacles all over the Street and now the government as well with Paulson as Treasury Secretary. They're always one step ahead.
From the Ft article today: While the justice department's letter has no effect on last year's approval of the CME-CBOT deal, it re-opens the sensitive issue of clearing ownership just as the CME is poised to acquire the New York Mercantile Exchange, further bolstering the CME's dominance. However, the signatories to the letter - including George Baranko, an attorney central to last years's CME-CBOT probe - said their comments did not apply to "energy futures markets" - a move apparently designed to indicate that the department was not prejudging the outcome of any probe into a CME-Nymex merger. Commenting on Tuesday's letter, a spokesman for the Justice Department said: "In its comments to the Treasury, the Antitrust Division recommended a study to determine whether the current regulatory structure for interest rate futures transactions could be improved in a manner that would make entry easier. In the CME-CBOT transaction, the Division investigated whether the transaction would substantially lessen competition, which involved a range of issues. Among other things, the Division noted that the CME's products and CBOT's products were not close substitutes and that neither firm was likely to introduce products directly competitive with the other's established products. In connection with one issue, entry, the Division noted that, given the announced intentions of two exchanges to offer interest rate futures products, the evidence indicated that entry would not be foreclosed by the transaction under the current regulatory structure. The Division did not comment on the separate issue of whether the regulatory structure could be improved." http://us.ft.com/ftgateway/superpage.ft?news_id=fto020520081847316846&page=2 *********************************** So the DOJ comments were limited to interest rate products, and expressly excluded energy. Moreover, they were submitted as comments to a Treasury rule making and thus have no force in and of themselves. Chances the Treasury will invalidate the current CME structure: zero. Hard not to believe this was a gross overreaction.
I like the idea. I agree, instead of having one decent liquid market, we'll have several shitty ones - Certain things can't coexist. Eurex US's business plan sucked, that's what did them in. Not this clearing BS. They had no liquidity whatsoever. In fact the screen was blank during big economic releases. Who the fuck would trade that shit.
Interesting that the government is upset europeans weren't able to come in and grab some US commodity business away from an american institution. Why not just move it all to dubai?