CBOE, CBOT End Talks to Merge Businesses
Chicago’s biggest on-again, off-again marriage is off again.
Chicago Board Options Exchange leaders said Thursday that they have called off merger talks with the Chicago Board of Trade, saying the business strategies and plans of the two derivative-securities marts, which remain mired in a trading rights dispute, were too different.
The CBOE also said it would ask the Securities and Exchange Commission for an interpretation of the rules concerning the right of full CBOT members to exercise trading rights at the CBOE, providing certain conditions are met.
“After careful analysis and considerable discussion with the CBOT, we have determined that a merger is not feasible at this time,” CBOE leaders wrote in a letter to the options exchange membership Thursday.
The CBOT and the neighboring CBOE started exploring an alliance in March. Derivatives exchanges worldwide are merging to cut costs and boost trading among retail and institutional customers who increasingly want to trade online.
“I am very disappointed that the CBOE closed the door on a merger,” CBOT Chairman David Brennan wrote in a letter Thursday to CBOT members. “We are going to continue moving forward with our restructuring strategy.”
The CBOT now plans to issue members shares of a for-profit company and create a wholly owned subsidiary called the Electronic Board of Trade.
Meanwhile, in Europe, the London Stock Exchange on Thursday offered steep cuts in the cost of trading and opened the door to a possible friendly takeover by three European counterparts--all in the hope of winning over skeptical shareholders and thwarting a hostile buyout.
The London exchange has agreed to merge with Germany’s Deutsche Boerse, but an unexpected $1.2-billion bid from OM Gruppen of Sweden threatens to upset those plans.
Don Cruickshank, chairman of the London market, suggested it might invite exchanges in Spain and Italy to join with the Germans in making a “white knight” offer to blunt the Swedish bid.
He also endorsed an arrangement to slash as much as 90% off the cost of buying and selling shares. The plan was put forward by the firms that handle the clearing and settlement of trades on the London and Frankfurt exchanges.
