From the February 01, 2007 issue of Futures Magazine • Subscribe!

Fights of the year

FIGHTS OF THE YEAR

When the International Securities Exchange launched in 2000, it gained option market share at a rapid pace. But CBOE counterpunched effectively with its hybrid market model and maintained market share thanks to exclusive licensing agreements with index providers Standard & Poor’s and Dow Jones Indexes. On the heals of a legal victory allowing multiple listing of options on ETFs, ISE has asked a Federal court in New York to allow them to list SPX options without a license.

CBOT vs. CBOE

Perhaps the perfect solution to the intractable battle over the CBOE exercise rights held by former CBOT members would be for the two to reunite. That apparently was the idea as the two exchanges were negotiating a possible merger in August. Alas, talks broke down, the CBOT sued CBOE over the value of the exercise right and the CME/CBOT merger was announced two months later.

NYMEX vs. ITSELF

The energy exchange started out the year scrambling to find an electronic solution as it lost market share in its benchmark WTI contract to ICE and battled with its Comex subsidiary for the right to list Comex metals contracts electronically. Nymex cut a deal with the CME to list its products on Globex and finally settled with it Comex division —at a hefty price — prior to its successful IPO.

NYMEX vs. ICE/NYBOT

Nybot’s proposed merger with ICE was a kick in the gut to Nymex, an exchange that shares a floor with Nybot and a bitter rival of ICE. Many see their recent launch of cash settled softs contracts as a move motivated by spite.

DEUTSCHE BORSE vs. NYSE

Nothing is quite as sad as unrequited love. And despite political leaders pushing European unity, Deutsche Borse could not put together a deal that would keep Euronext from seeking the bright lights of New York and its merger with the New York Stock Exchange. In November Deutsche Borse officially dropped out of the bidding.

NASDAQ vs. LSE

Deutsche Borse was not the only spurned suitor. The biggest tease of the merger mania appears to be the London Stock Exchange (LSE). LSE continued to spurn advances from the Nasdaq Stock Market despite Nasdaq rolling up a 29% equity stake in LSE.

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