The Merc has been eager to expand off its traditional strength in interest-rate futures trading.
Fewer than 700, 000 short-term interest-rate futures contracts traded on the Chicago Mercantile Exchange just six years ago.
These involve selling short-term December 1999 interest-rate futures contracts and buying September 1999 and March 2000 ones, on the assumption that short-term rates will spike over the millennium because of extra demand for cash.
All the same, the usually predictive Fed-funds futures market is pointing to another interest-rate cut of half a percentage point at the Fed meeting at the end of this month.
The futures market was pricing in some chance of an interest-rate hike before the year is out.
It is a founding member of ERIS, which has developed a futures contract that mimics a variable Libor-based interest rate swap.
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Duffy and Donohue argued that the two exchanges rarely competed directly, and that their chief competition wasn't other futures markets but the vastly larger markets in over-the-counter derivatives like interest-rate swaps.
Yet, even after the central banks' announcement, dealers cited by TradeTheNews.com said that some interest rate spreads were still high, with the TED spread (which is price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars) still above 30 basis points.
Eurodollar futures and options, where investors hedged or speculated on the interest rate paid on a 90-day deposit of a dollar overseas, were half of the Merc's business, with 1.5 million contracts traded per day.
But last month, when the French futures exchange, Matif, opened electronic markets alongside its pits, trading in short-term interest-rate contracts quickly migrated to the computers.
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