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Given the continuing consolidation in the futures industry, and the rip-
roaring
stock prices some electronic stock trading firms are enjoying, could it be
time
for some Futures Commission Merchants (FCM) with electronic trading products
to
try to take advantage of the high-flying IPO market and cash out?
Could the recent tragedy involving Griffin Trading be causing some in the
futures industry to reassess the risks involved in electronic futures trading.
Doing this against the backdrop of the soaring stocks of electronic stock
trading firms presents ideal conditions to sell via an IPO.
Because of the consolidation of the futures industry, there are fewer and
fewer
players to sell out to if you want out. And often when you sell out, you
don't
always get the money you think you should for the business. In fact, I
remember one firm giving away $75 million in customer business a few years
back
because they did not want the related risk anymore.
The IPO market's interest in electronic trading presents the ideal opportunity
to sell a firm and cash out at premium prices.
Since no one firm in the futures industry has the dominant electronic trading
platform, or system interface, it might make sense for several firms with
electronic trading operations to merge to create the system flexibility and
critical mass to make it attractive to the IPO market.
It would not surprise me to see the owners of some well know, privately held,
brokerage firms going this route and taking the cash. This could herald a new
era for the industry and tremendous flexibility for such a firm's clients.
Regards,
John J. Lothian
Disclosure: Futures trading involves financial risk, lots of it!
Disclosure: John J. Lothian is the President of the Electronic Trading
Division of The Price Futures Group, Inc., an Introducing Broker.
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