Chicago Mercantile Exchange CEO Craig Donohue countered IntercontinentalExchanges claim that its proposed merger with the Chicago Board of Trade would result in lower clearing costs for customers.
The CME has an outstanding merger agreement with the CBOT; ICE made a counteroffer for the CBOT last week.
CME provides optimal margining. Its clearing members can choose to have their customers accounts use gross or net margining. Net margining would be a step backward, Mr. Donohue said in a conference call with analysts today.
CME Clearing House currently clears trades for the CBOT. Under gross margining, the clearing house holds collateral from both long and short positions, but in the event of default, it will only liquidate net positions. ICE is proposing to apply net margining to CBOT products if the merger is successful.
ICE responded with a news release saying it is committed to building and investing in a clearinghouse that offers a new level of service to the Futures Commission Merchants, customers, exchanges and the broker community.