Newspaper article THE JOURNAL RECORD

Traders Fear Competition from Overseas

Newspaper article THE JOURNAL RECORD

Traders Fear Competition from Overseas

Article excerpt

By John M. Doyle

Associated Press

BOCA RATON, Fla. _ The traders who bet millions of dollars on the price of wheat, crude oil and other commodities have plenty to be upbeat about at their annual meeting in Boca Raton. But they'll also be talking about matters sure to bring them down.

Volume _ the number of contracts traded on U.S. futures exchanges _ was back up in 1992 after falling nearly 5 percent in 1991, the first drop in decades.

More than 295 million futures contracts were traded on the nation's exchanges, an increase of 12.3 percent over 1991, according to the Futures Industry Association, which is meeting through Saturday.

But foreign competition also grew last year.

All but three of the world's top 10 futures and options exchanges are located overseas, although the foreign exchange with the greatest volume in 1992, the London International Financial Futures Exchange, was a distant third behind the Chicago Board of Trade and the Chicago Mercantile Exchange.

Nonetheless, the U.S. futures industry is worried.

"The primary issue at Boca: Save the industry," said association President John Damgard in an interview late last week.

Adding to the concern is the threat of increased taxes on futures transactions. For the fourth time in as many years, the White House has proposed taxing trades in futures contracts as a revenue source.

The Clinton administration proposal, offered last month, calls for a processing fee, in effect a transaction tax, projected to raise $235 million over four years.

Industry leaders like Chicago Merc Chairman John "Jack" Sandner contend such a fee would increase the cost of doing business on U.S. exchanges, giving a competitive edge to overseas markets.

"We will do our utmost to see that this counterproductive levy is defeated," Sander told Chicago Merc traders in a letter written after the Clinton administration proposal was made public. …

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