World''s largest exchange is born as Chicago Board of Trade - Chicago Mercantile Exchange merge
13 Jul 2007
Mumbai: Shareholders for the Chicago Board of Trade (CBOT) have approved plans to join forces with longtime rival, the Chicago Mercantile Exchange (CME, also called Merc), in an $11.9 billion deal. (See: CME bids $11.5 billion for CBOT v/s ICE''s offer of $11.4 billion)
The merger creates the world's largest exchange but ends 159 years of independence enjoyed by CBOT, the world's oldest commodities exchange.
The deal should close within days, the two exchanges said adding, the new firm operating the exchanges will be called CME Group, a Chicago Board of Trade company.
With the agreement to buy the Chicago Board of Trade sealed, CME, the biggest US futures exchange, will move trading to the CBOT''s art deco building.
CME''s purchase of the CBOT also marks a transition from pit-based to electronic trading. CME will be shifting pits to the CBOT building to preserves traditional face-to-face trading, which many traders still prefer. But, over a period, trading floors are expected to become obsolete as electronic trading takes over.
The Chicago Mercantile Exchange Trust, established in 1969 to provide financial assistance to CME financial settlement firms that become insolvent, owns the current trading floor. The trustees may decide in the next couple of months on the future of the trading-floor space, said Kassie Davis, the trust''s executive director.