Goldman seen joining bank-owned futures exchange

By Joseph A. Giannone

NEW YORK (Reuters) - U.S. investment bank Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz) is considering joining a dozen banks and trading firms working to launch a futures exchange that would compete with the Chicago Mercantile Exchange, people familiar with the situation said on Tuesday.

In December, 12 companies including JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz) and Chicago hedge fund Citadel Investment Group announced they were forming an all-electronic futures exchange.

In recent weeks there's been growing speculation that a new round of banks, including Goldman, Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz), UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz), would join the group. Goldman Sachs declined to comment.

An official announcement setting the group's name, chief executive and final investor list is expected in the next week, preferably ahead of the Futures Industry Association annual meeting in Boca Raton, Florida, which begins March 12.

A spokesman for the group, which includes Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz), Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz), GETCO LLC, PEAK6 and Royal Bank of Scotland Group Plc (RBS.L: Quote, Profile, Research, Stock Buzz), declined to comment.

The exchange -- operating for now with the working name "Four Seasons" -- would provide a low-cost alternative to CME Group CME.N, which dominates trading in U.S. financial derivatives.

The proposed mart, in the final stages of recruiting a CEO and hammering out other operational issues, previously said it would launch trading of U.S. Treasury futures early this year.

"Goldman is a formidable addition to Four Seasons due to its heft and its track record of spurring competition," Fox-Pitt Kelton analyst Ed Ditmire wrote in a research note. Ditmire warned that a competitive threat could weigh on CME shares.