One on One with Terrence Duffy, Chairman of the Chicago Mercantile Exchange
Tuesday, October 17, 2006
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SUSIE GHARIB: More now on today`s mega merger between the Chicago Mercantile Exchange and the Chicago Board of Trade. A short while ago, I talked with Terrence Duffy, chairman of the Chicago Mercantile Exchange and asked him why he finally decided to merge his exchange with his rival.
TERRENCE DUFFY, CHAIRMAN, CHICAGO MERCANTILE EXCHANGE: Well, I think there`s several reasons why now. I mean, first, the Chicago Mercantile Exchange became a publicly traded company back in December of `02. And obviously, we have had great growth and the benefits of that, and we have looked at different consolidation throughout our industry. And now that the Chicago Board of Trade also went public just literally about a year ago and has had an opportunity beyond the marketplace, I think the timing was right from both perspectives. And again we see consolidation happening throughout the world. The benefits of having these two organizations together for our customers and our shareholders was just something, it hard not to do in good timing.
GHARIB: Mr. Duffy, how do you think your merger is going to change the way business is done in the futures market?
DUFFY: I just think that we`re going to look at products that are on a single platform. Our Globex electronic trading platform, which is distributed in over 70 countries throughout the world and we`re going to have all these products on one single platform, which is going to create huge efficiencies in the marketplace.
GHARIB: But do you think that there`s a downside to simplifying the trading process that investors and traders might lose out by not having multiple trading platforms?
DUFFY: Well, again, to that point, there is multiple trading platforms. There`s a lot of competition throughout the world, which is one of the reasons why it was the right time to do this merger with the CBOT. There`s competition from the over-the-counter market throughout Europe and Asia, and so again, I think it`s an appropriate time.
GHARIB: What impact do you think that your merger is going to have on other exchanges like the New York Mercantile Exchange, the New York Board of Trade. How much of a threat is this merge to their business?
DUFFY: You know, I`m not going to comment on that, Susie. I think right now what we`re very happy about is we were able to sign a definitive agreement with the Chicago Board of Trade and again, we`re very, very happy with this transaction.
GHARIB: There`s been speculation that the New York Stock Exchange and the NASDAQ might be moving in on your turf in the derivatives and the futures market. How might that challenge your new company?
DUFFY: Well, again, I think that goes back to the points I made earlier. There`s a lot of people competing in the derivatives business. So If in fact other exchanges want to get into it, that`s not something we don`t anticipate. Again, we will continue to grow our business.
GHARIB: Have you talked Mr. Duffy, to regulators? Is there any risk of not getting approval for your merger?
DUFFY: First, I think we were very well advised going into this transaction and we don`t believe that there`s any regulatory issues that we haven`t discussed that can overcome.
GHARIB: All right. So, what do you think is going to be the biggest growth driver of the combined companies?
DUFFY: Well, I think the biggest growth driver you`re looking at the synergies associated with being on a single platform and again, I think that`s a big part of the growth prospect of this transaction.
GHARIB: As you probably heard, there`s a lot of speculation already about what`s the next step. You mentioned consolidation and there`s speculation that the Chicago Merc is going to start looking for an international merger and acquisition. What do you think? Is that the next step?
DUFFY: Well, let`s first stay with the Chicago Mercantile Exchange. The CME is truly a global institution already. So again, we made a definitive agreement today with the Chicago Board of Trade and we are very happy with that and we are going to execute to close that transaction.
GHARIB: Mr. Duffy, thank you very much and congratulations.
DUFFY: Thank you very much.
