Newly formed CME Group is the world's largest and most diverse exchange.
From their entrepreneurial beginnings in the 19th century, the Chicago Board of Trade and the Chicago Mercantile Exchange evolved with distinct styles and unique cultures. Today, as these two historic exchanges merge into a single entity – CME Group – what matters most is their common future.
For more than a century, CBOT and CME created, defined and built the futures industry, and kept it alive and growing through innovation and adaptation. Now, after their merger on July 12, 2007, they are united as a single company to better serve the risk-management needs of customers around the globe.
“This merger takes us to the next level in the ongoing evolution of our high-growth business,” says Terry Duffy, CME Group executive chairman. “We now will be able to combine the capabilities and best practices of both organizations – establishing an even stronger, more competitive position than either could achieve individually.” The $11-billion merger transaction created a $30-billion company that offers customers the most liquid markets available for exchange-traded benchmark products based on the entire U.S. interest rate yield curve, equity indexes, foreign exchange, agricultural and industrial commodities, and alternative investment products such as weather and real estate. Average daily volume exceeds 13 million contracts bearing a notional value of more than $5 trillion.
“We are the world's premier financial marketplace in terms of product breadth, global reach and market capitalization, and ensure that Chicago remains the center for risk management worldwide,” says Charlie Carey, vice chairman of the new entity.
The new company also sets the stage for tremendous cost efficiencies that will enhance its global position.
“This merger allows us to offer our diverse product set on the CME Globex trading platform and to facilitate all open outcry trading on CBOT's trading floor, while clearing all transactions through CME Clearing,” says Craig Donohue, CME Group chief executive officer. “As a result, customers will benefit from the broadest range of distinct products, increased efficiencies and unsurpassed liquidity.”
CBOT products will be available on the CME Globex platform starting in first-quarter 2008 and the CME trading floors will move to CBOT by second-quarter 2008.
The revenues of CME Group are the most diversified of any exchange in the world. Merging the products also increases the ability to cross-sell different products and functionality enhancements across the product lines. An FX trader, for example, can trade and spread with U.S. Treasuries on a single platform. This positions CME Group to better compete with other marketplaces across multiple asset and product sectors around the world, while achieving revenue synergies.
“The new group will deliver significant efficiencies along with new products and technologies,” says Donohue. “Our customers will be able to realize the benefits – not only cost savings, but also expanded opportunities by placing complementary products on a consolidated electronic trading platform and trading floor.”
CME Group also is well equipped to deal with evolving global markets, including overthe- counter and cross-continental exchanges that offer access to multiple asset classes such as stocks, futures and options. These exchanges, intermediaries and end-users are evolving rapidly – a sign of the greater global competition that spurred the creation of the new company.
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