No, it isn't. It's so women can enter the game without the pressure of going into a tournament setting mostly dominated by men. A trans-woman being in the women's tournament does not compromise that unless you don't think trans-woman are women. Being born male does not impact one's ability to compete in chess, just the accessibility of a competition dominated men. If you're already in the women's space, then that issue is entirely moot. A trans-woman faces the same social barrier to competing, and is entitled to the same protected space.

The only argument against that is if you don't really think trans-woman are women.