A battle has started between Chicago Board Options Exchange
(CBOE) and Chicago Mercantile Exchange (CME) over the launch of
credit derivatives contracts.
The debate has raised issues over what would and would not
constitute an options or futures contract, but also highlighted
the different regulatory regimes and processes at Securities
and Exchange Commission (SEC) and Commodity Futures Trading
Commission (CFTC) that appeared to give futures exchanges an
advantage over securities exchanges.
In a letter to CFTC, CBOE lawyers argued that CME's proposed
listing of credit event futures would in fact be an options
launch. CBOE cited a number of issues relating to the CME's
binary contract, including that it carries all of the elements
of an options contract, and is based on a security.
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