WASHINGTON -- The Chicago Board of Trade asked regulator yesterday to clear the way for futures exchanges to offer swaps contracts, including municipal swaps products, to exchange members and other market participants.

The board is asking the Commodity Futures Trading Commission to give swaps offered through futures exchanges the same reprieve from extensive futures regulation that the over-the-counter swaps market won in a rule approved by the CFTC on Jan. 15.

"The CFTC has already granted the over-the-counter markets broad exemptions," said board of trade president Thomas R. Donovan. "This petition simply follows the course set by those exemptions and urges the CFTC to allow exchanges to compete with the over- the-counter markets head to head.

"Both types of market users should benefit from the fair competitive landscape where market users will be looking for the best, most innovative service at the lowest cost.

Patrick H. Arbor, chairman of the board of trade ,said. "This exemption is about fairness and making derivative markets stronger. " Arbor had expressed strong objections to the board's earlier decision to exempt over-the-counter swaps from CFTC regulation but not to exchange traded instruments.

The board noted that the petition, if granted, would allow an exchange to offer a variety of instruments - from futures and options to swaps and hybrids -to professional traders only. No small, retail public customers would be eligible to place orders to trade on the professional trading market, officials noted.

Under the board of trade's petition, the CFTC would have to be notified when the market begins operations in a particular swap, and all market participants would be required to comply with CFTC fraud and market manipulation rules. Also, all trades would have to be submitted to a CFTC-approved clearing system.

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