Chicago Mercantile Exchange Holdings Inc. beat electronic rival IntercontinentalExchange Inc. to win the bidding for CBOT Holdings on Monday in a hard-fought deal that creates the world’s largest derivatives exchange, MarketWatch reports.
The deal “creates a strong international company better positioned to compete with growing global exchanges and the over-the-counter market,” says, CME Executive Chairman, Terry Duffy.
Exchanges are consolidating at a rapid clip as trading in stocks, bonds, commodities and derivatives goes global and electronic. Derivatives exchanges have experienced the fastest growth as new types of investors, such as hedge funds, have become active in previously difficult-to-trade instruments based on energy and agricultural products as well as financial derivatives.
“Starting on day one, our combined company will be ready to compete in the global environment-well-armed for growth and innovation,” says Bernard Dan, CBOT chief executive.
ICE Chief Executive Jeffrey Sprecher said on Monday that he was disappointed by the outcome of the vote, but added in a statement that the bidding war produced several benefits, not least nearly $3 billion of extra value for CBOT investors.
“The future winners in our industry may not be the biggest or oldest players,” Sprecher concluded. “Success will be determined by the ability to adapt quickly to changing markets and innovate responsively in creating new products and serving customers around the globe.”