Reuters, Merc Sign Trading Network Pact

Reuters Holdings PLC and the Chicago Mercantile Exchange said Monday that they had signed a previously announced agreement for the joint operation of a new 24-hour electronic futures and options trading network.

The companies said the 12 1/2-year agreement called for the network to begin operation in the summer of 1989 and that they planned to open it to other vendors and exchanges.

The system, known as Globex, will allow Chicago Mercantile Exchange members and their customers to trade financial futures and options contracts on Reuter terminals when CME trading pits are closed.

Leo Melamed, chairman of the CME executive committee, told a news conference in London: “Our partnership with Reuters ushers in a new era of futures and futures-options, whereby the 24-hour trading day is realized.”

Regulatory authorities’ approval for the deal is pending. Melamed said the partners expected to get the go-ahead from the U.S. Commodity Futures Trading Commission as the system is “probably a regulator’s dream” because of the ease with which auditors can track futures and options transactions.

The former chairman of the London International Financial Futures Exchange, Brian Williamson, had criticized the exclusivity of the original 1987 concept of Globex at a seminar in April. But Melamed said Monday: “Since that time the idea has been fleshed out in a form that we feel does not deserve any longer the criticism that it might have previously.”

Globex will link investors and financial communities in North America, Europe and Asia by way of an electronic trading system for futures and options contracts on such currencies as the British pound, West German mark, Swiss franc and Japanese yen.