CME says can weather markets' rough patch

By Ros Krasny

NEW YORK (Reuters) - CME Group Inc CME.N, the world's largest derivatives market, can benefit from the current rough patch in global financial markets, its executive chairman said on Monday.

Months of credit-market chaos, leading to such events as the sale of investment bank Bear Stearns in March, have made centrally cleared exchanges more appealing, Terry Duffy said at the Reuters Exchanges and Trading Summit in New York.

"Who would think that a prime broker would not be a counterparty that you could rely on? Even though JPMorgan stepped in and was able to assume the Bear Stearns' exposures, I think that is something that a lot of people never believed could happen," he said.

As a result, "the centrally cleared model that the CME provides ... is becoming, I think, more and more attractive for a lot of clients."

Duffy said CME had not been hurt by the "deleveraging," or reduction of exposure to risk, under way at many financial firms in the wake of the tightening of the credit market.

Open interest in Eurodollar futures and options, used to bet on and hedge against changes on U.S. short-term interest rates, is down 5 percent to 20 percent at various points on the yield curve from its peak in 2007.

But Duffy said the drop was "not a deleveraging issue, of people not being able to participate in the marketplace."

As well as worries about financial market stability, CME's shares have been hit this year by a Department of Justice call for a shake-up in futures exchanges, including an end to markets owning or controlling their own clearing houses.  Continued...