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CBOT, Eurex may link up
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March 19, 1998: 6:40 a.m. ET
Largest derivatives exchange aiming for autumn merger with Europe giant
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NEW YORK (CNNfn) - The Chicago Board of Trade is believed to be forging an alliance with Eurex, the all-electronic continental European exchange, to allow for trading of both exchange's contracts through a common global network.
The proposed link-up, reported Thursday by London's Financial Times, seeks to create a global communications network for CBOT's electronic after-hours trading system, known as Project A, and the Eurex system. The report comes a day after the American Stock Exchange and Nasdaq tentatively agreed to merge their listings.
The arrangement is said to be specially designed so as not to disrupt CBOT's open-outcry market auction system during daytime trading hours in Chicago.
The merger, if completed by autumn, would put additional pressure on the London Financial Futures and Options Exchange. The exchange, which has steadily lost market share to other European boards, is reportedly aiming to shift to an electronic listing of its main products by the end of 1999.
The FT said the CBOT and Eurex are also interested in adding a third "strategic partner" to the alliance. Pat Arbor, CBOT's chairman, told the newspaper that the Tokyo Future's Exchange, with which CBOT already has a relationship could be a potential partner. Eurex's chief executive, meanwhile, suggested Simex, the Singapore-based Exchange.
The exchanges apparently want to enact a system that would allow a user to access both markets through a single terminal by spring 1999.
Under the terms of the link-up, CBOT would offer derivatives in North American currencies and all agricultural contracts, the FT said. The Eurex would provide derivatives in European currencies.
Eurex was formed from the merger of Frankfurt's Deutsche Terminborse (DTB) and Soffex of Switzerland. It is also involved in a link-up with Matif of France.
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