CME Group has entered informal talks with the Chicago Board
Options Exchange about a possible $5bn takeover of the equity
options market, according to an unconfirmed report in the
newspaper Crain’s Chicago Business on October
Unnamed sources told the paper the exchanges’
officials had held informal discussions through intermediaries
over the past month.
A spokesperson for CME Group in London declined to comment,
as did a press official at CBOE in Chicago.
If the takeover takes place, the world’s
dominant futures exchange will also become the leading stock
options market in the world. The idea might win backing in
Chicago from those who want a champion to defend the
city’s central place in the world derivatives
But otherwise, market participants said the main arguments
for a deal were the cost savings that might be wrung out of the
combination and the money CBOE members could make from it.
Frederick Grede, chairman of Vega Financial Engineering, a
consultancy, and a former Chicago Board of Trade executive,
based in Chicago, said the move had been "a long time
Grede said: "It’s always been a dream, a desire
to unify or merge the Chicago exchanges," on the part of the
Describing the mood in Chicago, he said: "Market
participants are always looking to lower their costs of doing
business. They want the best technology, the quickest access,
the most liquid markets at the lowest possible costs. Bringing
the users of the CBOE options products together on the same
platform as the futures and options at the CME brings a lot
more product opportunities at lower costs."
Lynton Jones, chairman of Bourse Consult, a London-based
consultancy, said: "It strikes me as an inevitable step for
both CME and CBOE."
Asked whether it could be anti-competitive, he said: "To a
certain extent that’s true," but added that there
was enough competition in the US and global options
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