Philip McBride Johnson asks what Justice has been smoking
A remarkable turn of events has occurred in the United
States where our Department of Justice has asked the Department
of the Treasury to consider whether the current structure of
credit protection in the domestic futures markets should be
scuttled. Instead of the ownership and control of
clearing being held by the exchanges that host trading in the
guaranteed futures contracts, new and different clearing
organizations might emerge to which traders could not only
submit their trades for financial vouching but could then
liquidate those trades on whatever market they might
choose. And so, a Eurodollar futures contract might be
created on CME Group, cleared by the Johnson Clearing
Corporation, and liquidated on the Minneapolis Grain Exchange.
Initially, the concept offered by Justice, that trades might be
created and offset on different markets, overlooks the fact
that the ability to enter and exit with minimal price
impact liquidity will...
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