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CME HAD URGED FED ACTION TO EXPAND BANKS' FUTURES BUSINESS OPPORTUNITIES

 CHICAGO, May 27 /PRNewswire/ -- Officials of the Chicago Mercantile Exchange (CME) today said they were pleased that the Federal Reserve Board (FRB) had taken a major step forward to ease the regulatory burden on banks that participate in financial futures and options markets. CME Chairman Jack Sandner said the exchange had been urging the Fed action for years, and the issue demonstrates the need for an overhaul of federal financial services regulation, which he has been advocating.
 The FRB this week announced that it has delegated additional authority to the Federal Reserve Banks to approve proposals by bank holding companies to act as Futures Commission Merchants (FCMs), as well as modified and, in certain cases, eliminated the prior approval requirements for bank-affiliated FCMs to trade in financial futures and options.
 "This will clearly expand the business opportunities of major international banks, which comprise more than one-third of our member firms at the Chicago Mercantile Exchange," Sandner said. "For too long, these banks have encountered unnecessary and lengthy delays in gaining federal approval to use our markets, which are clearly of enormous value to the banks for risk and asset management."
 Sandner said he was pleased with this week's action and feels confident that the Fed will take the next important step -- easing prior approval requirements for trading non-financial futures and options. The CME on April 19 formally petitioned the FRB to allow bank-affiliated Futures Commission Merchants (FCMs) to trade in these markets as well.
 CME President and CEO William J. Brodsky explained: "Non-financial futures and options markets are subject to the same rigorous oversight and safeguards as the financial futures and options markets. There is no reason why bank FCMs must continued to encounter delays in participating in these markets and we continue to urge the Fed to recognize this."
 Sandner, who has proposed a model for restructuring the federal regulation of financial services under a single, cabinet-level agency, added, "The Fed's action demonstrates that it is within the power of regulators to react to changing market needs, but it also demonstrates the glacial pace of change when it comes to financial market regulation. We need a regulatory structure that can react rapidly to changing market needs. Otherwise we will continue to lose market share to foreign competitors who operate under more user-friendly regulatory structures."
 -0- 5/27/93
 /CONTACT: Andrew Yemma, 312-930-3434 or fax, 312-930-3439, for the CME/


CO: Chicago Mercantile Exchange ST: Illinois IN: FIN SU: LEG

CK -- NY050 -- 2926 05/27/93 11:52 EDT
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Publication:PR Newswire
Date:May 27, 1993
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