US federal antitrust regulators have approved the proposed merger between the Chicago Mercantile Exchange (CME) and the Chicago Board of Trade (Cbot).
The US Department of Justice (DoJ) has cleared the proposed merger without conditions and says that neither the deal or an existing clearing JV between the Chicago exchanges was "likely to reduce competition substantially" or "lead to less innovation and fewer new products".
The DoJ's decision gives CME a boost in its bidding war against Atlanta-based InterContinental Exchange (ICE) for control of Cbot.
The CME and Cbot agreed an $8 billion deal in October to merge to form the world's largest derivatives exchange. But last month the Chicago exchange boosted its original $8bn offer for Cbot by 16% following ICE's higher $10 billion bid in March. The Cbot board rejected the higher ICE bid after the CME upped its offer.
Cbot members and shareholders are next set to vote on the CMe merger on 9 July.
In a statement CME executive chairman, Terry Duffy, says the DoJ's decision "allows for the marketplace to have a clear view of our merger prospects".
"Only our merger allows shareholders and customers to benefit from the greater ability of a combined CME and CBOT to generate growth and achieve synergies with significantly lower integration risk," says Duffy.
Cbot CEO Bernard Dan adds: "As we speak with our members, shareholders and customers, we are ever more convinced that the strategic fit of the CME/CBOT combination is truly in the best interest of all our stakeholders, providing low integration risk and long-term value."
The proposed CME/Cbot merger has also drawn criticsim from the US Futures Industry Association (FIA) which warned in Februrary that the proposal could substantially harm competition among US futures exchanges and raise barriers to entry for new competitors.
But the DoJ says its investigation into the merger found that this is unlikely to happen.
"The evidence indicates that neither the clearing agreement nor the transaction will foreclose entry by other exchanges," says the DoJ. "Indeed, the New York Stock Exchange, in connection with its acquisition of Euronext.liffe, recently announced its intention to offer futures products, and the Intercontinental Exchange (ICE), in connection with its bid to purchase control of CBOT, has publicly stated its intent to offer interest rate futures regardless of whether its bid succeeds."