ICE begins move to rival CME and Nymex
By Anuj Gangahar in New York and Hal Weitzman in Chicago
Published: January 31 2008 19:40 | Last updated: January 31 2008 19:40
The Intercontinental Exchange has held talks with a fledgling futures exchange backed by a posse of banks and trading firms with a view to forming a competitor to a combined CME Group and Nymex.
Talks are at an early and informal stage, involving meetings between members of the new consortium and ICE management, according to people close to both sides.
Consolidation seen as boon to competition - Jan-31ICE in spotlight amid merger talks - Jan-29Lex: CME and Nymex - Jan-29CME in $11bn move for Nymex - Jan-29CME casts its eye in Nymex’s direction - Jan-28Lex: Global exchanges - Jan-28The new exchange, the working name for which is Four Seasons, remains in its early stages of development, with internal talks about the company’s management structure and interviews for the role of chief executive taking place.
Both parties declined to comment.
CME and Nymex said this week they were in merger talks.
Larry Tabb, founder of US consultant the Tabb Group, said that in spite of the prospects of a CME/Nymex deal, ICE was in a good position, particularly if it could reach an agreement with the new exchange.
“If the dealers backing the new exchange want a place to go, they could do worse than buying an existing exchange. If they come in for the ICE, they would immediately form a competitive platform.”
The powerful group of companies backing the new futures exchange are Citigroup, Citadel, Deutsche Bank, Merrill Lynch, Bank of America, Barclays Capital, Credit Suisse, eSpeed, Getco, JPMorgan, Peak6, and Royal Bank of Scotland.
Consolidation has swept the exchange business in recent years, and talks between almost all exchanges and their competitors and peers are a regular occurrence as participants jockey for position.
Jeffrey Sprecher, chief executive of the ICE, said on Thursday that the proposed CME-Nymex deal “does not seemingly change the landscape” in trading, noting that the New York exchange had been moving towards electronic trading, bringing it closer to ICE’s all-electronic model.
His comments came as ICE moved on Thursday to shore up its position in the over-the-counter sector with the purchase of YellowJacket, an electronic platform for OTC trades in energy and weather.
Sang Lee, founder of US consultancy the Aite Group, said he would not be surprised to see ICE become a target, but also did not rule out a bid for Nymex by ICE itself.
But Mr Sprecher on Thursday appeared to dismiss the suggestion that his exchange might bid for its competitor, indicating that there had been plenty of chances for ICE to try to purchase the exchange, but it had chosen not to make an offer. “Nymex has been available for sale for quite a long time,” he said. “We’ve had opportunity – as has anyone in the market.” |
