They played down talk that the exchanges, two of the world's largest derivative bourses, are contemplating a merger in the face of falling seat prices but noted that they were moving beyond just unifying their clearing functions -- so far the biggest joint effort to make a significant progress."We've had discussions on and off with the Merc," a CBOT spokesman said. "There have been more talks recently."

He declined to specify when leaders of the two exchanges had met recently or what was discussed at the meetings. The CBOT spokesman, as well as his CME counterpart, were reluctant to characterise the alliance talks as a move toward a merger, stressing that the exchanges were also talking to other bourses, including ones overseas, on various issues.

"The Board of Trade workson many fronts to compete in the global market," the CBOT spokesman said. "We recognise the importance of establishing global alliances to serve our members and customers."

In fact, the CBOT last month announced an alliance pact with EUREX, the pan-European electronic derivatives exchange. The CME also plans to switch its GLOBEX electronic trading system to a platform developed by Matif and other French bourses.

Asked about increased dialogue between the two Chicago exchanges, a CME spokesman said: "The Merc has been engaged in intensive strategic planning effort. And to the extent that that includes more frequent conversations with the Board of Trade or anybody else, it would be true."

He said adopting a common electronic trading platform to save costs was one of the issues that had been discussed.

"It's no secret we've been talking to the Board of Trade as well as other entities, but we don't have any announcements to make about what we're talking about right now," he said.

Progress in cooperationefforts between Chicago's cross-town rivals have been conspicuously slow to date.

The common clearing plan initially came up at an industry conference in Florida in early 1996, when it was thought to be a first step toward a merger.

But it was only last month, after years of twist and turns, that the boards of directors at both exchanges finally voted for the plan, which now awaits membership votes.

Despite a near consensus that common clearing would save significant costs for member firms, the vote was far from unanimous with CBOT's board voting 14 to 8 in favour of the move.