News Release

CME Group Statement on U.S. House Bill Updating Financial Markets

Fri Feb 13 2009

CHICAGO, Feb. 13 /PRNewswire-FirstCall/ -- CME Group, the world's largest and most diverse derivatives exchange, has issued the following statement regarding U.S. House of Representatives Bill 977:

 

CME Group commends the efforts of the House Agriculture Committee to ensure that the regulated exchange-traded futures and options markets overseen by the Commodity Futures Trading Commission (CFTC) and the exempt over-the-counter (OTC) derivative markets serve the best interests of the investing public. While HR 977, the "Derivatives Markets Transparency and Accountability Act of 2009," includes valuable measures to further enhance both transparency and adequate staffing and information resources for the CFTC, CME Group does not support the bill for the following reasons:

 

The legislation requires the imposition of hard position limits in already-regulated commodity and energy futures markets that will significantly impair liquidity necessary for commercial hedgers and market professionals such as farmers, energy producers and airline and transportation companies seeking to legitimately transfer business risks.

 

The bill is directly antithetical to its own purposes in that it will divert trading in highly regulated commodity and energy futures markets to less regulated OTC and foreign markets accessible to U.S. investors but beyond the reach or jurisdiction of the U.S. government.

 

The legislation imposes artificial constraints on the definition of hedge transactions that will impair OTC dealers from facilitating more complex hedging transactions and hedging their own net exposures from their swap dealing activities in regulated futures markets with the consequential result of further impairing hedging and risk transfer opportunities for U.S. Investors.

 

And finally, the bill effectively requires the mandatory clearing of virtually all OTC derivative contracts and will therefore drive a significant portion of OTC business offshore, lessening the regulatory effectiveness of the CFTC.

 

We look forward to working with lawmakers to continue to discuss proposals to ensure a sound regulatory financial system.

 

CME Group (www.cmegroup.com) is the world's largest and most diverse derivatives exchange. Building on the heritage of CME, CBOT and NYMEX, CME Group serves the risk management needs of customers around the globe. As an international marketplace, CME Group brings buyers and sellers together on the CME Globex electronic trading platform and on trading floors in Chicago and New York. By acting as the buyer to every seller and the seller to every buyer, CME Clearing virtually eliminates counterparty credit risk. CME Clearing also offers financial safeguards to help mitigate systemic risk, providing the security and confidence market participants need to operate, invest and grow. CME Group offers the widest range of benchmark products available across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, and alternative investment products such as weather and real estate. CME Group is listed on NASDAQ under the symbol "CME."

 

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group and its products can be found at www.cmegroup.com.

CME-G

SOURCE: CME Group

Web site: http://www.cme.com/

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