CME Group is in talks to buy Dow Jones Indexes, according to The Financial Times, which reports that a deal would cost CME Group $700 million. This Wall Street Journal story cites the advantages of the deal, including cost cutting (as CME Group now pays Dow Jones licensing fees) and protecting the CME Group’s existing business lines. It’s unclear how or if this would affect CME Group’s current exclusive licensing agreement with S&P indexes. A CME Group spokesperson would not comment on anything specific. Do you think the deal will happen? Would it affect your trading? Leave your thoughts in the comments section below.

On the eve of the annual Futures Industry Association’s Futures and Options Expo there is a lot of activity and rumors floating around.

Continue reading ‘Show time’ »

When the Dow Jones Industrial Average hit 10,000 for the first time in March 1999, I was standing on the financial floor of the Chicago Mercantile Exchange. A large roar of approval rose from the traders as the Dow hit that historic and unprecedented benchmark.

Continue reading ‘Irrational exuberance on steroids’ »

CME Group announced this week that they would launch a new 30-year bond futures contract, one that would be nearly identical to the contract traded at the Chicago Board of Trade for more than 30 years except that deliverable securities for the new Long-Term Bond future will comprise cash Treasury bonds with at least 25 years of remaining term to maturity. The benchmark 30-year contract accepts deliverables with at least 15 years remaining to maturity. The so called “Ultra” Treasury bond will begin trading in the first quarter 2010.

Continue reading ‘Doubling down on long bond’ »

CME Group CEO Craig Donohue had a very relevant quote during today’s meetings on harmonization between the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC). Alluding to the differences between the securities and futures markets, Donohue said it was like “Greeks speaking Chinese to people who speak Portuguese.” Sorting out the regulatory overlaps between the CFTC and SEC and achieving the harmonization called for by President Obama’s regulatory blueprint is a complicated matter indeed. The two agencies must complete a report on harmonization by Sept. 30. Otherwise, the matter will be forwarded to the Financial Services Oversight Council. CFTC Commissioner Bart Chilton said he was optimistic that the two agencies could “solve their issues without ’Mom and Dad’ in the form of the Treasury Department stepping in.”   Continue reading ‘CFTC-SEC: Hiccups to harmony?’ »

Industry leaders wasted no time commenting on the Obama Administration’s new regulatory reform proposal, “Financial Regulatory Reform: A New Foundation,” released yesterday.

The proposal received mostly a chorus of praise from the industry. CME Group called it “a significant step towards restoring confidence in the integrity of financial markets.” International Swaps and Derivatives Association CEO Robert Pickel said in a statement that it “provide[s] an important framework for financial regulatory reform.” In his statement, Futures Industry AssociationPresident John Damgard “commend[ed] the administration for the thoughtfulness and comprehensiveness of its plan.” In a statement, Chicago Board Options Exchange ChairmanBill Brodsky said, “We are particularly pleased that the plan recognizes the need for greater coordination and harmonization of the SEC and CFTC,  including streamlining the approval of new products and rule filings.” But not everyone is singing the proposal’s praises. Continue reading ‘Proposal packs punch’ »

While the long-term impact of the Swine Flu epidemic on the markets and trading is still to be determined, CME Group is taking necessary precautions on the matter. In response to the outbreak, CME Group put out the following statement: ”We have an established business continuity team that coordinates specific plans for a variety of scenarios, including a pandemic, across all of our departments and locations. We are distributing CDC information on the swine flu outbreak and other flu prevention tips to our employees and members.” CME Group had no further comment, but continues to monitor the situation closely, according to a spokesperson.  U.S. stocks ended lower on Monday, with the Dow falling 0.6% to 8,025, according to Market Watch.

Credit default swaps (CDS) were thrown into the spotlight in late 2008 after the credit crisis put markets into a tailspin. Exchange efforts to develop central clearing facilities for CDS began last fall. After going through the regulatory approval process, The Intercontinental Exchange (ICE) began clearing CDSs  on March 9 and CME Group received its exemption from the SEC to clear and trade CDSs through its clearing venture with Citadel, CMDX, on March 13.

Continue reading ‘CDS spin’ »

One of the major issues discussed in the CFTC’s April agriculture forum was the lack of convergence between futures and cash prices in the ag markets. In July, the agency’s Agricultural Advisory Committee held another meeting about convergence, where Acting Chairman Walt Lukken noted that “Some commercial participants have lost confidence in the ability to hedge in certain of these markets and it is critical that market participants work with the Commission to address this matter aggressively.” Today CME Group offered to the CFTC some recommendations to improve convergence in its wheat contract, including increasing storage rates during the period from July through November to 8 cents per bushel per month, adding delivery points and a recommendation that the vomitoxin level for par delivery be lowered from three parts per million (ppm) to two ppm.

Continue reading ‘CME Group offers convergence tips’ »

It doesn’t seem that long ago when a beaming Terry Duffy, Craig Donohue, Leo Melamed, Jack Sandner, Jim McNulty and Dick Grasso rang the opening bell at the New York Stock Exchange on the day the Chicago Mercantile Exchange went public. It was Dec. 6, 2002 and was one of the most significant and successful initial public offerings of this century.

The Merc launched that day with an offering price of $35. That price would grow to more than $700 five years later and although the CME has lost about half its value since the December 2007 high, if you asked CME leaders in 2002 if they would take 1,000% growth in five and a half years they would probably have taken it.

Continue reading ‘CME takes its ball from NYSE’ »