CME Group Inc on Monday unveiled a cross-margining plan that would help customers trading both interest rate and Treasury futures, as the world's largest derivatives exchange prepares for more competition.
The move by the Chicago Mercantile Exchange parent to create a new clearing membership class comes weeks before rival NYSE Euronext is expected to launch a similar cross-margining platform.
It suggests CME is taking the competitive threat from NYSE seriously, as exchange operators globally maneuver to take advantage of global regulatory reforms that will push far more derivatives through trading venues and clearinghouses.
CME's new membership class -- called Financial Instruments Clearing Membership (FICM) -- would provide margin benefits of up to 65 percent between interest rate futures and Treasury securities, it said.
It is expected to launch by the end of the current quarter, CME said. The company named four trading firms that have tested the offering and are working toward becoming FICM members.
The New York Stock Exchange parent expects in March to launch NYSE Liffe U.S., a rate futures market, at the same time as its partly owned New York Portfolio Clearing (NYPC) clearinghouse for the products.
Underlining the importance of derivatives businesses, Germany's Deutsche Boerse bid this month to acquire NYSE Euronext -- a combination that would dominate European futures trading and squarely take on CME on the global stage.
(Reporting by Jonathan Spicer, editing by Maureen Bavdek)