Reported Merger Threatens to Further Consolidate CME Group Inc.’s Near-Monopoly and Increase Lack of Competition in Derivatives Markets
WASHINGTON— Better Markets and the Open Markets Institute released the following statement concerning their joint letter to antitrust and financial regulators raising serious concerns about the CME Group’s (CME) near-monopoly in derivatives markets – by some measures the CME already facilitates 92 percent of U.S. exchange-traded derivatives volumes – and the recently reported potential merger between the CME and Cboe Global Markets (Cboe):
Stephen Hall, Legal Director at Better Markets, stated that “[t]he CME’s acquisition spree in the last 15 years has reduced competition in the U.S. derivatives markets to the point that one exchange group now has a monopoly or near-monopoly on numerous critical futures contracts and derivatives markets. Because of this stranglehold, a hidden tax is routinely extracted from America’s working families, increasing the price of everything from a tank of gas to a loaf of bread.”
“A merger between the CME and one of its few remaining competitors will only further concentrate risk in ways that increase volatility and the likelihood of disruptions,” said Alexis Goldstein, Director of Financial Policy at the Open Markets Institute. “Such concentration may also make it easier for large corporations and speculators to manipulate the prices for the goods, services, and commodities traded on these markets, in ways that harm our communities and families. Further, such concentration harms independent investors by reducing choice, raising prices, and cutting transparency.”
“If anything,” Goldstein added, “regulators and Congress should be looking to reduce the CME’s existing concentration of power of markets by reversing some of the dangerous mergers of recent years.”
The CME has denied that a merger is planned. Yet, the Financial Times’ reporting on the CME-Cboe merger transaction was remarkably specific. “If the reports are accurate,” Mr. Hall emphasized, “an investigation of the transaction and its potential adverse competitive effects would be a public-interest imperative.” In the letter, Better Markets and the Open Markets Institute also request that the Federal Trade Commission and Department of Justice undertake a public industry study of the existing concentration problems at derivatives exchanges, and the impacts of fifteen years of consolidation.
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
The Open Markets Institute is a team of journalists, researchers, lawyers, economists, and advocates working together to expose and reverse the stranglehold that corporate monopolies have on our country. Learn more at www.openmarketsinstitute.org.
