Release: 4821-03
For Release: July 15, 2003


WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) today announced the approval of rules submitted by the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME), pursuant to Section 5c(c)(3) of the Commodity Exchange Act, implementing a Common Clearing Link (Link) between the two largest U.S. futures exchanges. The Link is an agreement under which the CME will provide clearing and related services for all CBOT products. Under the terms of the Link, clearing services are expected to begin in November.

The Commission is aware that the Link and these rules have generated considerable discussion in the futures industry. Indeed, the policy and legal issues involved have been well known to interested parties since they were initially raised at the CFTC Clearing Roundtable held almost a year ago. CBOT, CME and the Board of Trade Clearing Corporation have consulted widely with their members and the Commission about this project and submitted to the Commission an agreed transition schedule on June 13.

Under the Commodity Exchange Act, the Commission is not obligated to publish rule submissions of self-regulatory organizations. Nevertheless, based upon the many expressions of interest in this matter, the Commission decided to provide a short comment period.

The rules are necessary for the orderly implementation of the Link and will provide continuity of financial integrity and customer protection in the futures markets. The Commission believes that the Link and these rules further the Commodity Futures Modernization Act’s goal of supporting innovation in the futures industry.

The Commission’s decision was based upon the information before it, including comment letters from several interested parties. The Commission is aware of public and industry interest in related policy issues regarding market structure and competition, and looks forward to hearing more on these issues. The Commission believes, however, that this broader dialogue should not impede the planning necessary to move forward to implement the Link in an orderly manner. The Commission believes that it is of paramount importance to enhance legal certainty concerning the procedures to implement the Link so that all affected parties may make plans as necessary for a smooth and orderly transition beginning in November.