Donohue: further exchange consolidation ahead

The global exchange industry will see yet more consolidation during 2008, believes Craig Donohue, chief executive of the CME Group in Chicago.

Speaking exclusively to Risk, Donohue said that, while exchange consolidation had already slowed in some parts of the world, more will come over the next year. “At some point it will slow because a lot of it will have played out, but I think there are still one or two more chapters left,” he said.

Exchanges that are narrower in their product lines, in particular, are looking to become part of a larger organisation, he remarked. This would enable them to be more competitive in terms of distribution, technology or bottom-line costs.

Donohue’s comments preceded today’s announcement by Frankfurt-based derivatives exchange Eurex that it had completed its acquisition of the New York-based International Securities Exchange (ISE). Eurex chief executive Andreas Preuss will join the board of ISE, which will be run as an independent subsidiary of the German exchange under its own management team.

CME Group – itself formed from the merger of the Chicago Board of Trade (CBOT) and the Chicago Mercantile Exchange (CME) in July – is pushing ahead with its own integration efforts, Donohue said. By January 14, it expects to have transferred CBOT’s commodities, and Dow Index futures and options, onto its Globex electronic trading platform, with interest rate products to follow by January 28.

However, CBOT’s metals products are not included in the transfer, instead remaining on the exchange’s eCBOT platform until June. This is due to a commercial arrangement between the CME and New York Mercantile Exchange (Nymex), whose contracts it has listed on Globex since 2006. Since then, Globex-listed Nymex contracts have continually broken the platform’s daily trading volume records.

A profile of Craig Donohue and CME Group will be featured in January 2007’s edition of Risk.

See also:
TSX to take over Montreal Exchange
CME seals deal with CBOT
ISE merges with Eurex