CBOT Holdings, the parent of the Chicago Board of Trade, will merge its trading platforms with those of the Chicago Mercantile Exchange in the first quarter of next year in an attempt to cut costs, CBOT Chairman Charles Carey told CNBC Tuesday.
On Monday, CBOT got the final go-ahead from shareholders to merge with its longtime rival in an $11.9 billion deal. The merger, which came after a tough battle with the upstart IntercontinentalExchange, will create the world's largest derivatives exchange.
In an interview on CNBC, top executives from the two companies said the deal is expected to close within the next several days. They expect the merger to create an exchange that will have top positions in futures and options contracts linked to interest rates, stock-index futures, currencies and a range of commodities.
“You’ll have all products on a single platform, Globe-X,” Terry Duffy, executive chairman of Chicago Mercantile Exchange Holdings, told CNBC. “We’ll have all the major asset classes on a single platform disseminated through 80 countries throughout the world. We think that’s very powerful. Then, we’ll bring all our open-outcry products over to the Chicago Board of Trade to create efficiencies for members, customers and benefit of our shareholders.”
The deal was announced last October, but appeared to be in doubt after ICE, of Atlanta, made a competing bid. CME cinched the deal after increasing its offer enough to win the backing of Caledonia Investments, CBOT's largest shareholder.
“I think if these two great institutions didn’t come together, we’d be looking at massive job cuts because there was no guarantee that either the CBOT or the CME would remain in Chicago,” Duffy said. “Consolidation is happening all around us in the United States and the world. Both of us would be forced to do something eventually. So, this is the best result for the City of Chicago and our global economy.”
Carey also suggested the merger was necessary in order to remain competitive.
“You need scale to compete in the global marketplace," Carey said. "You’ve seen consolidation start and we’re just doing what makes sense for these two great exchanges.”
The Chicago Board of Trade was founded in 1848, while the Merc began in 1898.