These are interesting times for the CME. I have followed the performance of the company’s shares ever since they were listed at what now looks like the unbelievable bargain price of $35 back in December 2002. The shares recently peaked at just over $700, but they have fallen back and are trading around $535. One of the factors behind the recent fall is the news that the US Department of Justice has called for the break up of the CME’s vertical silo. The exchange also owns its clearing house, which the Department of Justice feels stifles competition.
Over the past six years, every drop in the CME’s stock price has proved a buying opportunity. It will be interesting to see if the latest pullback proves the same. But it is clear that the exchange’s cage has been rattled and its chief executive, Craig Donohue, is not ready to roll over and break up an important cash cow. This week, Donohue took the opportunity to attack critics of the CME’s vertical model in a speech to the US Managed Funds Association in Florida: “I would like to share my thoughts with you on what many regard as an arcane or philosophical topic: market structure.