Swiss German derivatives exchange Eurex has filed an antitrust lawsuit against the Chicago Mercantile Exchange and Chicago Board of Trade alleging that they have illegally attempted to block its entry to the US market.
The action charges the CBOT and the CME with having violated the Sherman Act by offering financial inducements, valued at over $100 million, to shareholders of The Clearing Corporation (TCC) to vote against a proposed restructuring of the company.
Eurex's action comes after weeks of frantic manoeuvring and political lobbying by the Chicago exchanges to delay or block the opening of a rival US futures market by the European screen-based exchange.
The lawsuit alleges that the CBOT and CME have collaborated to launch their offer to TCC members despite having no legitimate interest in the outcome of the vote, but with the sole purpose of preserving CBOT's monopoly position.
Michael McErlean, director of Eurex subsidiary US Futures Exchange, says: "With this action we want to re-establish a level playing field on which we can compete on the merits."
The CME has dismissed Eurex's lawsuit. In a statement, the exchange comments: "The CME has not offered, directly or indirectly, any financial inducements to shareholders of The Clearing Corporation to vote against a proposed restructuring of TCC". The CBOT has yet to respond.
According to the lawsuit, the CBOT has offered a "spurious justification" that its offer is being made to ensure the timely transfer of open positions and accompanying guarantee funds to the CME. Eurex challenges that the transfer of positions will follow a plan previously implemented by rule changes adopted by the CBOT and the CME.
States Eurex: "These rules, adopted this summer, were regarded by many market participants as an anticompetitive effort to preserve the CBOT's monopoly position in the Treasury Bond futures contract."
The suit seeks preliminary and permanent injunctive relief and treble damages as provided by federal antitrust law.
CME claims the suit is a smokescreen, designed to divert attention away from "material deficiencies" in Eurex's application to become a designated contracts market. The CFTC, the futures industry regulator, yesterday moved to take Eurex's application off a 60-day fast-track for review following intense lobbying by the Chicago exchanges.