Winds of change

In the seven months since the Chicago Mercantile Exchange went public, its stockprice has risen over 70%. If the other major US futures and options exchangeswere publicly traded companies, it’s a fair bet that they too would berising stars. In the last 18 months, exchanges have reaped record earnings onunprecedented volumes of listed interest rate and equity index contracts.

In equities, both retail and institutional clients have been active. But thereal action is in rates, spurred by portfolio and asset-liability managers’ repositioningafter the Fed’s 25 basis point rate cut in June, combined with strong continuingbusiness from mortgage hedgers and swap and swaptions dealers (seearticle).

All is not smooth sailing, however. The Chicago exchanges are watching with sometrepidation Eurex’s plans to bring its dynamic electronic model to theUS markets. Old Chicago