October 14, 2009 / 6:45 PM / 10 years ago

U.S. regulators approve ELX's futures rule change

NEW YORK, Oct 14 (Reuters) - ELX Futures LP, the upstart exchange hoping to challenge industry leader CME Group Inc (CME.O), said on Wednesday U.S. regulators approved its application to allow traders to move positions between two different clearinghouses.

The privately held exchange operator said the rule change, by the U.S. Commodity Futures Trading Commission, gives traders flexibility and enhances competition in the market for Treasury debt. Since it began in July, ELX has grabbed less than 5 percent of the U.S. market, long dominated by CME Group.

The approval could represent a small victory for ELX, which biggest challenge remains the lack of fungibility in futures products — meaning a product bought on the CME, for example, cannot be sold on another exchange.

The CFTC approved a rule called Exchange of Futures for Futures, or EFF, allowing the buying and selling of futures contracts from exchanges offering the same products.

ELX, which made the application in July, has the backing of 13 major banks or brokerages, including JPMorgan Chase & Co (JPM.N), Morgan Stanley (MS.N) and Chicago-based Getco, the big high-frequency market maker. (Reporting by Jonathan Spicer)

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