If equity swaps carry a legal risk in the U.S., they can as easily be completed in England. No U.S. firm will refuse to participate on the ground that the legal uncertainty creates a moral issue. We remain committed to open out-cry trading as the primary transaction system, but customers rule. Their choice will eventually dictate whether trading stays on the floor or moves to the black box. Obviously, we are prepared to provide whatever service our customers demand.
Electronic markets have a free choice of venues.
An electronic exchange in Germany or in England is free to place terminals throughout the U.S. and directly compete with U.S. regulated markets. The Exchange has considered whether to move our electronic trading system to a more understanding regulatory environment. In fact, our black box is already in Europe, although for the moment it remains subject to the CFTC's jurisdiction. If an off-shore venue permits a desirable form of trading with lower fees and no taxes, and the Exchange cannot overcome that advantage with superior liquidity, business will transfer. Since liquidity flows with the business, eventually all business will be lost.