Chicago exchanges mull a merger

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Chicago exchanges mull a merger

The CME and CBOT look to be the most likely candidates for a tie-up, despite their long-standing rivalry

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Finally the derivatives exchanges in Chicago appear to be doing what many market participants have been pushing them to do for years: merge.

It's all rumour and speculation at present, but as the Chicago Board of Trade readies itself for an initial public offering, an early tie-up looks increasingly likely.

Both of the city's two other major derivatives exchanges have, according to rumour, expressed an interest in merging with the CBOT, but it is the Chicago Mercantile Exchange, not the Chicago Board Options Exchange, that is the frontrunner.

Rivals

The two exchanges have been rivals for years, but a combination of new management at both of them, increased competition from European derivatives exchanges and spiralling technology costs have brought the CME and the CBOT closer together in the past two years.

The Merc, run by chairman Terry Duffy and CEO Craig Donohue, is the stronger of the two. It demutualized and launched its IPO at the end of 2002, since when its share price has risen from $35 to more than $300. The CBOT, assuming it were to stay independent for as long, would be unlikely to achieve such good returns.

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