Second City no more

Jill Barshay Jul 11, 2007


Doug Krizner: In the next few days the largest financial exchange in the world will be created, not in New York, or London or Hong Kong, but in Chicago. It’s the result of the merger of the Chicago Mercantile Exchange and the Chicago Board of Trade. And although the names may change, the game remains the same. Jill Barshay reports.

Jill Barshay: The new CME Group exchange will be one gigantic processor of financial trades, 10 million contracts a day.

The CME will have a near monopoly on interest rate and stock index futures. Some people worry trading costs will rise.

Mutual funds and pensions buy a lot of derivatives on the Chicago exchanges. Their investment returns could fall.

Craig Donohue is the chief executive of the CME Group. He says the average fee of 65 cents a trade is likely to go down, not up.

Craig Donohue: What this kind of consolidation allows us to do is reduce our per unit cost of trading for customers.

The new CME will be even bigger than the New York Stock Exchange.

Donohue: That’s puts us into a position along with our large market capitalization to continue to consolidate the marketplace.

Donohue says he wants to grow even bigger by offering new products and maybe buying even more exchanges.

In New York, I’m Jill Barshay for Marketplace.

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