Chicago Economic & Finance News

[Via Chicago]

Originally Posted by Neuman

Chicago has had a Stock exchange since 1882..

Its located just South of the CBOT and shares the same building as the CBOE if I'm not mistaken...

Chicago Stock Exchange, Inc.
One Financial Place
440 South LaSalle Street
Chicago, Illinois 60605

Here's a link to their site below,

http://www.chx.com/

Yup. its the 4th largest in North America behind the New York Stock Exchange, NASDAQ, and the Toronto Stock Exchange.


http://upload.wikimedia.org/wikipedi...B6%D0%B0_1.jpg


http://www.foto.md/photos/153.jpg

[Nowhereman1280]

^^^ Why do I get the feeling that building a stock exchange over a road is a bad idea?

Regardless of what 10023 says, I would like to see CHX expand and perhaps buy a competitor to ensure its existence and growth in Chicago for a long time to come!

[left of center]

Chicago is also home to the National Stock Exchange, one of the 5 regional stock exchanges in the US (the others are CHX, Pacific, Boston, and Philadelphia)

[Master Shake]

not to argue a vs. thread, but economic status, especially in the financial arena change, and often quickly. London has by many measures surpassed NYC and the future clearly belongs to derivatives markets.

The versatile, innovative and aggressive shall inherit the Earth.

[FourOneFive]

Originally Posted by left of center

Chicago is also home to the National Stock Exchange, one of the 5 regional stock exchanges in the US (the others are CHX, Pacific, Boston, and Philadelphia)

FYI The Pacific Stock Exchange was purchased by Archipelago Holdings which was then purchased by the NYSE. Both the Boston and Philadelphia Stock Exchanges are now owned or will be owned by NASDAQ.

[the urban politician]

CME's ambitions rile many
By Anuj Gangahar and Hal Weitzman

Published: January 31 2008 02:00 | Last updated: January 31 2008 02:00

Some in the derivatives industry jokingly refer to CME Group as the Microsoft of the exchange world - a dominant, ever more-powerful company that many love to hate but is nearly impossible to resist.

If CME is Microsoft, by extension Craig Donohue, the exchange's CEO, is the Bill Gates of derivatives. Like Mr Gates, he is pursuing a strategy to make his company the biggest and most powerful in its sector. And like Mr Gates, he inspires emotions in the rest of the industry ranging from admiration and envy to fear and loathing.

The CME's every move seems to upset someone. Its $11.3bn bid for the Nymex, though long anticipated, is no different. While the exchanges themselves seem pleased with the proposed deal - a $11.3bn cash-and-shares offer - others are grumbling. Brokers and other futures commission merchants are complaining about the power of a "super exchange"; some energy traders worry about price increases and some brokers who trade on the Nymex could even move to another exchange to avoid the CME.
Financial Times

[the urban politician]

If this deal goes through, we are talking about creating a roughly $45 billion titan which will control about 98 per cent of the US's listed futures sector.. I can understand why a heck of a lot of people are trembling and complaining.

[Dr. Taco]

allllthe pooooooower willll be OURSSSSS

[Nowhereman1280]

Capitalism is best when you are on the winning team!

The cool part about this is that, since trading (especially futures and options) is such a fluid industry, I believe that dis-economies of scale are a long way off for this company and it will remain free to terrorize the seas of international finance gobbling up smaller exchanges like the mighty Kraken!!!

[10023]

Originally Posted by the urban politician

If this deal goes through, we are talking about creating a roughly $45 billion titan which will control about 98 per cent of the US's listed futures sector.. I can understand why a heck of a lot of people are trembling and complaining.

That's a bit of a distortion.

Nymex is a metals and energy market. The CME group trades completely different commodities, in addition to its (now primary) business of currency and interest rate derivatives.

It would be one thing if you were merging the largest oil futures market with the second largest oil futures market, but you're not. If you merge, for example, a big oil futures market with a big corn futures market, you're not stifling competition, you're just making it possible for customers to trade more things in one place (which benefits them) and reducing cost with scale (which can also benefit customers if higher volume allows lower per transaction fees).

Second, I don't think they would have anywhere near 98% of the total U.S. market, even broadly defined. There is still the fairly large ICE, based in Atlanta, and the CBOE, based in Chicago. More importantly, this is an international market not a U.S. market, where the customers are largely international firms. This isn't like having the two grocery store chains in your town merge and now there's no alternative for buying food. The CME still competes against Eurex, LIFFE, and Asian growing exchanges. It's just as easy for a trader in New York to buy contracts on the Paris or London exchanges as the Chicago exchange.

[the urban politician]

^ I couldn't agree with you more, and hopefully that argument wins over the DOJ when they review this deal.

Those stats I posted were directly pulled from this article, but I'm not going to go out of my way to defend them as I'm no expert.

[10023]

Originally Posted by the urban politician

^ I couldn't agree with you more, and hopefully that argument wins over the DOJ when they review this deal.

Those stats I posted were directly pulled from this article, but I'm not going to go out of my way to defend them as I'm no expert.

I think this deal will have a much easier time passing DOJ muster than the merger of CME and CBOT, for the reasons I've mentioned. And like that deal, I believe Nymex already uses CME's clearing operation, so there's no reduction in competition in terms of the back office mechanics either. That said, I'm sure they'd love to get this done before GWB leaves office, just as airlines are in a hurry to consolidate.

[the urban politician]

My second question is this: does anybody know what percentage of global derivatives a combined CME-Nymex entity would control?

[10023]

Originally Posted by the urban politician

My second question is this: does anybody know what percentage of global derivatives a combined CME-Nymex entity would control?

I doubt it's possible to give a real answer to this, although you may be able to find some attempts. They certainly won't tell you, because it would be against their interest to talk about share. Beyond that, the only way to really look at it would be for specific asset classes (e.g., percentage of U.S. Treasury futures volume). It's hard to compare across asset classes - what do you use? Number of trades? Nominal value of positions? Fees earned (very different depending on what the asset class is)? How do you account for long vs. short positions, or options on underlying commodities or instruments, for which you pay a fee to the exchange but for which you can't really count the value of the underlying asset toward some total?

The DOJ, obviously, will try to come up with the best answer they can, which we'll never hear, because in the end it will only be one estimate that they use toward the goal of determining whether the transaction would harm competition. But that's just just about crossing a certain threshold of market share, either.

[the urban politician]

ICE begins move to rival CME and Nymex
By Anuj Gangahar in New York and Hal Weitzman in Chicago

Published: February 1 2008 02:00 | Last updated: February 1 2008 02:00

The Intercontinental Exchange has held talks with a fledgling futures exchange backed by a posse of banks and trading firms with a view to forming a competitor to a combined CME Group and Nymex.

Talks are at an early and informal stage, involving meetings between members of the new consortium and ICE management, according to people close to both sides.

The new exchange, the working name for which is Four Seasons, remains in its early stages of development, with internal talks about the company's management structure and interviews for the role of chief executive taking place.
Financial Times

^ In this article, it is mentioned that ICE has no intention to bid for Nymex

[alex1]

*haha*

funny stuff. things should intensify.

competition is good. I'd rather see competition which erodes Chicago standing in futures and derivatives than chicago becoming the center for all eternity . if ICE moves to chicago even better. But first and foremost, competition is what I'm for.

[the urban politician]

Originally Posted by alex1

*haha*

funny stuff. things should intensify.

competition is good. I'd rather see competition which erodes Chicago standing in futures and derivatives than chicago becoming the center for all eternity .

^ Screw that. I'd love to see Chicago become the 'center of the universe for all eternity'. Why should New York always have all the fun?

[the urban politician]

Observer: Terry Duffy adds Washington clout
Published: February 1 2008 02:00 | Last updated: February 1 2008 02:00

Excerpt (regarding the recent announcement of Dennis Hastert joining CME's Board):

Hastert's arrival is another sign of the political clout wielded in Washington state by the Windy City's exchanges.

Last year, that came in handy persuading Washington's antitrust people that there really were no monopoly concerns in the acquisition of the CBOT; the deal was eventually waved through.

And with the possible addition of Nymex helping to create an even bigger juggernaut in the derivatives world, having Hastert on board can't hurt.
Financial Times



I found this next article an interesting look back in time. Published in early 2004, shortly after Bank One agreed to be acquired by JP Morgan, it depicts the gloom surrounding Chicago's future as a global financial center. Interestingly, while many of the issues discussed in the article continue to hold true, one can say with confidence that things really haven't turned out quite so badly for Chicago today:

Chicago's Financial Center Could Lose Its Last Pillar
By DAVID BARBOZA

Published: January 15, 2004

CHICAGO, Jan. 14 - When J. P. Morgan Chase acquires Bank One, probably sometime later this year, the city of Chicago seems all but certain to lose its last major banking headquarters. Indeed, people here are already lamenting the deal as one more step toward the demise of Chicago as a major financial center.

"Emotionally, it's upsetting," said Paul O'Connor, executive director of World Business Chicago, a nonprofit economic development corporation for the city. "In my line of work, headquarter pelts are prized, but the economic impact is the real question."

And that has some here worried. In recent years, this city - built on steel, railroads, chewing gum, ad jingles and pork bellies - has been steadily eclipsed as a financial and corporate center, experts say.
New York Times

[Master Shake]

Originally Posted by the urban politician

Observer: Terry Duffy adds Washington clout
Published: February 1 2008 02:00 | Last updated: February 1 2008 02:00

Excerpt (regarding the recent announcement of Dennis Hastert joining CME's Board):

Hastert's arrival is another sign of the political clout wielded in Washington state by the Windy City's exchanges.

Last year, that came in handy persuading Washington's antitrust people that there really were no monopoly concerns in the acquisition of the CBOT; the deal was eventually waved through.

And with the possible addition of Nymex helping to create an even bigger juggernaut in the derivatives world, having Hastert on board can't hurt.
Financial Times



I found this next article an interesting look back in time. Published in early 2004, shortly after Bank One agreed to be acquired by JP Morgan, it depicts the gloom surrounding Chicago's future as a global financial center. Interestingly, while many of the issues discussed in the article continue to hold true, one can say with confidence that things really haven't turned out quite so badly for Chicago today:

Chicago's Financial Center Could Lose Its Last Pillar
By DAVID BARBOZA

Published: January 15, 2004

CHICAGO, Jan. 14 - When J. P. Morgan Chase acquires Bank One, probably sometime later this year, the city of Chicago seems all but certain to lose its last major banking headquarters. Indeed, people here are already lamenting the deal as one more step toward the demise of Chicago as a major financial center.

"Emotionally, it's upsetting," said Paul O'Connor, executive director of World Business Chicago, a nonprofit economic development corporation for the city. "In my line of work, headquarter pelts are prized, but the economic impact is the real question."

And that has some here worried. In recent years, this city - built on steel, railroads, chewing gum, ad jingles and pork bellies - has been steadily eclipsed as a financial and corporate center, experts say.
New York Times

Seems like a long time ago indeed. Not too many people saying this anymore.

Ironic that as Wall Street banks are being bought out by the Chinese and Arabs, the American derivatives market based in Chicago is exploding. Most importantly, this market represents the future of finance, not the past.

[rgolch]

Couple things. As happy as I am about a good possibility of a CME/NYMEX merger, I think we should hold off the celebration until this goes through.

Second, that NY times article from 2004 wasn't totally incorrect. Other than the growth of futures and derivatives trading in Chicago, there hasn't been any major sentinel events since that article that makes me think that we not in a slow decline (in terms of our national/international business presence).