Critics of the proposed merger between the Chicago Mercantile Exchange and the Chicago Board of Trade merger advance an argument that has become de rigueur in Europe. Namely, they hold that exchange control of clearing is inimical to competition- and that clearing should be de-integrated from trading in futures markets. But they have yet to make an entirely convincing case.

This suspicion of vertical integration - "vertical silos" in Eurospeak - reflects an unfortunate return to an economic perspective largely discredited by another Chicago institution - the Chicago School of economics. Long ago, Chicago economists showed that rather than impeding competition, vertical integration is usually an efficient way to address contracting challenges that arise between the suppliers of highly complementary services, especially those subject to substantial economies of scale.