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Startup exchange ELX Futures on Wednesday sent a letter to U.S. futures regulators, charging that CME Group Inc. (CME) accepts trades that move positions out of its clearinghouse - something CME has said it forbids.

ELX is pressing the issue after getting regulatory approval last month for a rule that would let market participants arrange to move Treasury futures positions from CME to ELX.

The consortium-backed ELX is challenging CME's dominance in U.S. Treasury futures trade.

In a letter to the Commodity Futures Trading Commission, a copy of which was seen by Dow Jones, ELX Chief Executive Neal Wolkoff included a screen shot of what he said was an example of so-called transitory trades in crude oil futures, moving positions between CME's New York Mercantile Exchange unit and IntercontinentalExchange Inc. (ICE).

CME's legal experts have said that the Chicago-based exchange operator is not required by regulators to accept trades made for the purpose of moving Treasury futures positions to another clearinghouse, under its authority as a designated contract market.

ELX's so-called Exchange of Futures for Futures rule, or EFF, could let investors offset positions held at the two markets, according to ELX, while helping traders avoid margin calls where there is no market risk.

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

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