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Actually...the CME did nothing because the ICE paid
$50 million for rights that are NOT exclusive. The CME
can trade and list the russell as long as they wish if
there are active open interest positions by the
agreement already in place between the russell folks
and the CME. ICE just bought the rights to now list it
themselves.
Whether the CME continues to trade the russell or not
has nothing to do with anything ICE did---the CME
contract already gives them the right to keep trading
it. Will they? They may just to irritate ICE or to
keep people from trading any ICE version. Or they may
decide they have a new product they like better and
eventually de-list the russell. But the CME doesn't
have to do a thing, never had to bid to get rights
they already own, etc. I'm not speaking from a
guessing standpoint here. It's in the contract.
SP600? Dunno. But also remember the Dow electronics
are going 24 hours I believe mid January? And for
retail size traders, the russell was ok, but it has a
real liquidy problem at times. I do think the CME will
continue to try to develop a broader based index that
is popular, but we'll see what they choose to do with
the russell, the SP600, etc as time goes.
The CME held the cards, they hold the cards...they are
making economic choices here, folks. ICE paid $50 mill
for a contract that is worth about $10-12 mill in
rights...Not a bright business move. But I suppose
they were reacting after losing the CBOT.
Tim Morge
--- Mark Simms <marksimms@xxxxxxxxxxx> wrote:
> Bob - sorry, but it is obvious from the prior post
> of Mr. Kaplan that the
> CME decided
> to drop the ER contract in lieu of their new
> partner's (CBOT) Small Cap 600
> index futures contract.
> And this makes sense.
> Technically, from a financial standpoint, no one
> could out-bid the CME...
> they're like the 800 pound gorilla as far as
> exchanges goes.
>
>
>
> _____
>
> From: realtraders@xxxxxxxxxxxxxxx
> [mailto:realtraders@xxxxxxxxxxxxxxx] On
> Behalf Of Bob Fulks
> Sent: Tuesday, November 20, 2007 12:45 PM
> To: realtraders@xxxxxxxxxxxxxxx
> Subject: RE: [RT] E-mini Russell 2000
>
>
>
> At 11:59 AM 11/20/2007, you wrote:
>
>
>
>
> Sounds like David slaying Goliath....
> or did the CME really not want the ER contract...
> and I wonder why not....
> so something's strange here.
>
>
> The references I listed clearly showed that ICE
> out-bid them during
> the contract negotiations. See below. I see nothing
> particularly
> strange about that...
>
> Bob Fulks
>
> --------------------------------
>
> ICE wins Russell futures deal
>
> By Doug Cameron in Chicago
>
> Published: June 19 2007 13:49
>
> The share price of the Chicago Mercantile Exchange
> dipped on Tuesday
> after its rival for control of the Chicago Board of
> Trade snatched a
> key licensing agreement from under its nose.
>
> The Intercontinental Exchange continued the
> expansion of its product
> offerings with an exclusive deal to trade futures
> based on the popular
> Russell stock indices, forcing the CME to replace
> the product.
> The CME-Russell contract expires later this year,
> requiring the Merc
> to cease listing of futures based on the Russell
> 2000 index, which
> will be added to the suite of equity-based products
> traded on the New
> York Board of Trade platform acquired by the ICE
> last year.
>
> However, the Merc quickly fired back on Tuesday with
> plans to expand
> the range of products based on Standard & Poors
> equity indices,
> noting that trading in the Russell 2000 future had
> been thin. The
> exchange said it would launch a new contract based
> on an S&P small cap
> index which competes with the broad Russell 2000,
> and will use
> incentives to encourage traders to switch to its own
> new product.
>
>
>
>
>
>
>
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