ELX Futures LP, the start-up Treasury futures exchange, is contending that a partnership between NYSE Euronext (NYX) and the Depository Trust and Clearing Corp. unfairly excludes competitors.

DTCC, a provider of post-trade services, signed an exclusive deal with the new U.S. futures arm of NYSE Euronext to clear cash Treasurys and derivative products.

The bank-controlled ELX group said this has frustrated its own efforts to set up a similar clearing framework, and it has discussed its concerns with regulators, including the Securities and Exchange Commission.

"To my knowledge, no SEC-regulated clearing organization is allowed to have exclusive relationships with one partner," ELX Chief Executive Neal Wolkoff said in an interview.

NYSE Euronext officials argue that the DTTC partnership will boost competition in the U.S. futures market by introducing a more open clearing model. That's a departure from the current structure, whereby futures exchanges generally clear their own products, with the CME Group Inc. (CME) dominating the Treasury market despite the recent entry of ELX.

In June, NYSE Euronext and DTCC announced plans to develop New York Portfolio Clearing, a clearinghouse that would bring cash and derivatives positions under one roof and eliminate the need for investors to post trade collateral at two separate venues.

The venture, expected to launch in the second quarter of 2010, leverages DTCC's Fixed Income Clearing Corp. unit, which handles more than $4 trillion in U.S. government and mortgage-backed securities trades each day.

Liffe US, the NYSE Euronext derivatives platform, aims to develop futures linked to those issues, in competition with CME.

ELX went live in July and has secured around 2.5% of the Treasury futures market.

Wolkoff said ELX and its clearinghouse, the Options Clearing Corp., had held talks with DTCC about a clearing venture before NYSE Euronext stepped in.

Wolkoff said that according to senior DTCC officials, terms of their NYSE partnership carry an exclusivity clause for the period of development and two years afterward. That would preclude ELX or any other exchange from developing similar cross-margining services until 2012, he said.

"We continue to be interested in cross-margining, but we're unable to engage in those discussions - it's frustrating," said Wolkoff.

Tom Callahan, chief executive of NYSE Liffe US, declined to confirm the length of the exclusivity period, but said some time was necessary for the exchange and DTCC to earn back their investment.

NYSE Euronext has committed $50 million to the venture's guarantee fund, in addition to contributing manpower and its existing clearinghouse technology.

At the end of the period of exclusivity, Callahan said other exchanges will be allowed to plug into NYPC and take advantage of margin offsets between cash positions held at the FICC and corresponding derivatives.

"The margin efficiencies we're building will be available to the entire market, level the playing field and introduce competition to the U.S. futures market," Callahan said.

Wolkoff called that arrangement unsatisfactory for a start-up like ELX.

DTCC operates an industry-owned utility, as does the OCC, and ELX charged that this sort of organization should not enter into partnerships that exclude other parties.

"OCC believes that national clearing utilities have a duty to provide open access to the utility," an OCC spokesman said.

A DTCC spokesman declined to comment.

NYPC needs governmental approval before it goes live, and Wolkoff said that he has already raised his concerns privately in conversations with regulators.

When NYSE Euronext and the DTCC formally file for regulatory approval of the venture, Wolkoff said that ELX would make its objections known again.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com