Chicago-based Options Clearing Corp. said it will begin competing directly with CME Group Inc. for the first time, after agreeing to guarantee contracts traded at a new futures exchange run by the New York Stock Exchange’s parent.
NYSE Liffe LLC will switch clearing of its precious metals futures contracts to Options Clearing Corp. from CME at the end of the first quarter, NYSE said in a statement Tuesday. The New York exchange bought the suite of metals contracts — originally offered at the Chicago Board of Trade — from CME earlier this year.
CME has its own set of identical metals contracts, acquired when it purchased the New York Mercantile Exchange in August. CME’s contracts currently dominate the market, but OCC and NYSE Liffe plan to give the larger futures exchange a run for its money.
“We are neighbors here, and yet we are going head to head,” says Michael E. Cahill, OCC’s president and chief operating officer, whose offices are across the street from CME’s on Wacker Drive. “This will be a very interesting situation.”
NYSE Euronext, which owns NYSE, already competes with CME through its London-based futures exchange, known as Liffe. It got regulatory approval to operate a U.S. futures exchange this past summer.
NYSE Euronext owns 40% of OCC, which handles all U.S. stock options trading and is the world’s largest derivatives clearinghouse. CME is the world’s largest clearinghouse for futures contracts.
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