When one giant grows by swallowing another titan, it might seem natural to expect the pygmies to get a little worried.
But so far, small agricultural commodity exchanges don’t seem terrified by the prospect of a bigger, richer but hopefully not meaner, Chicago exchange.
“I’m personally not (worried),” said Mark Bagan, chief executive officer of the Minneapolis Grain Exchange, in an interview about the Chicago Mercantile Exchange’s deal to take over the Chicago Board of Trade.
Not only will the merged mega-exchange dominate North American agricultural futures trading – the CBOT dominates crop futures and the CME dominates livestock and meat futures – but small exchanges will continue to be dependent on its electronic trading platform.
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The Minneapolis exchange, the Winnipeg Commodity Exchange and the Kansas City Board of Trade all use the CBOT’s eCBOT program. Bagan does not anticipate problems dealing with the CME once it takes over the CBOT.
“Our customers at the Minneapolis Grain Exchange, a lot of them today use the (CME’s) Globex platform for electronic trading of both the New York Mercantile (Exchange) products as well as the Chicago Merc products, and our customers don’t have any concerns as to the technology or anything like that.”
Chicago was the birthplace of futures trading and has housed the world’s two most influential exchanges. Bagan said he was stunned when he heard the two had agreed to merge.
“It’s the most significant development perhaps in the history of United States futures. The magnitude of that deal is so dramatic that most people just don’t understand how big a deal it was.”
While combining the two downtown Chicago rivals has made economic sense for decades, the deal still shocked the futures world.
“I think people expected both those two exchanges to go after foreign exchanges,” Bagan said.
“This has been talked about for three or four decades, these two storied exchanges getting together. People had heard about these two talking for so long that they never put any stock in it actually happening.”
