The letter is the latest salvo in a battle between CME — which has long enjoyed a virtual monopoly on Treasury futures — and ELX, a start-up exchange that wants to break into the market.

ELX has won CFTC backing for a practice called exchange of futures for futures (EFF), which means market participants could move positions from ELX to CME. This should make them more willing to trade at ELX, secure in the knowledge that they could fall back on the CME’s liquidity if necessary.

Wolkoff said he felt compelled to write to the CFTC after what he described as “misleading statements” from CME Group, which he said was trying to prevent the market through “threats and intimidation, from using an approved rule”.

The letter to Richard Shilts, acting director of the CFTC’s division of market oversight, and Ananda Radhakrishnan, director of the division of clearing and intermediary oversight, followed a statement from CME Group which hinted that it would continue to reject trades opened at ELX, even though the CFTC had said its rationale for doing so was “unpersuasive”.

“The Commission has not required CME Group to accept block trades that violate its own rules or to accept block trades that otherwise violate CME Group trade practice rules,” CME said on January 26. “The Chicago Board of Trade and CME Clearing have not been directed to accept directions from ELX or any of its members to transfer open positions.

Wolkoff dismissed the CME statement, making three specific objections.

While CME was right in saying that it had not been asked to stop enforcing its rules, Wolkoff said that the statement was “completely beside the point”. CME was wrong, he said, to claim that EFF violated the Commodity Exchange Act.

“The CME Group still implies that the EFF is violative by raising the spectre that the transaction would violate CME’s ‘trade practice rules’. However, the CME Group has been told that its advisory, which was self-certified and has the status of a rule, has no basis of support,” Wolkoff wrote.

The ELX CEO said that through its choice of language, CME would leave the market with the impression that EFF transactions were still not permitted.

Second, Wolkoff objected to CME Group declaring that it had had no dialogue with ELX in order to “transfer open positions”.

Wolkoff said this was inaccurate in that an EFF transaction was a trade and not a position transfer. For CME to suggest that ELX needed to take steps to activate EFF transactions was, Wolkoff said, “akin to an official expression of disinterest”.

Wolkoff said ELX need have no communication with its rival in order for an EFF transaction to occur.

Finally, Wolkoff said CME’s statement on Core Principle 18 was also inaccurate. CME had said: “We believe, that upon full consideration, the Commission will agree that Core Principle 18 is directed at conduct which is considered to be anti-competitive under the anti-trust laws and that CBOT’s rules do not facilitate any anticompetitive activity.”

Wolkoff wrote: “The interpretation of Core Principle 18, while an opinion, is not a fact, nor is it Commission doctrine, as CME states. The language of Core Principle 18 does not mirror the Sherman Act, and there is no case law that says that a regulator can’t have a pro-competitive standard that creates a separate standard of conduct from the Sherman Act.

“While conduct that violates the antitrust laws may also violate Core Principle 18, conduct can violate that Core Principle without being in violation of antitrust laws.”

Wolkoff concluded that as a result of these inaccuracies, the CFTC should require the CME Group to post a new statement correcting what he called misleading statements. However, the CFTC has yet to comment on its future course of action against CME Group in regard to EFF transactions.