WASHINGTON -- The Chicago Board of Trade is proposing a scaled-down version of its professional trading market plan that would allow the exchange to compete with the over-the-counter derivatives market.

The new plan was submitted after the Commodity Futures Trading Commission agreed to consider only toned-down aspects of the exchange's initial petition.

The futures exchange is now proposing that the professional trading market would involve only the trading of swaps.

The exchange had originally petitioned the agency to provide regulatory relief for certain trading of financial products that would have included several types of futures contracts, swaps, and other derivatives, as long as the trades were limited to professional traders.

In light of recent derivatives losses, however, the agency felt the exchange's first proposal was too broad. As a result, the regulator released for public comment a streamlined version of the exchange petition.

The exchange, in its most recent filing, urged the futures trading agency to consider its modified plan or, if that was rejected, to expand the agency's recently released proposals.

"Our ProMarket petition is a vital component to our long-term business strategy," said the exchange's president and chief executive officer, Thomas Donovan.

"By providing a flexible exchange-style trading environment with lower regulatory costs, we hope, through the ProMarket, to entice existing OTC market dealers and users to a new market for trading swaps and related derivatives," Donovan said.

Under the exchange's modified professional trading market proposal, which was announced last week, swaps would be the only instruments eligible for trading in the professional trading market.

"The CBOT wants to offer in ProMarket the same instruments the CFTC defines to be swaps ... to the same parties as those eligible to enter into exempt OTC swaps," Donovan said.

The new professional market would be started as a three-year pilot, after which the futures commission would review the program, the exchange proposed.

In addition, pricing data reports would be provided both to the public and the government, customer funds deposited to margin trading activity would be held in a segregated account, and the futures commission would retain full-scale emergency authority to take actions in the event of a major disturbance.

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