Stock exchange: marriage in sight between two American derivatives giants

CME Group, the American derivatives trading giant, has made an offer to buy its Chicago counterpart Cboe Global Markets for an amount close to $ 16 billion, according to information from the Financial Times.

This offer would be made through an exchange of shares on the basis of 0.75 CME shares for one Cboe share according to people close to the file. This transaction would value Cboe 20% above its current price of $ 123. CME denied the information late in the evening.

Such a transaction would be tantamount to marrying two of the biggest players in the derivatives market. CME would thus diversify its product line well beyond futures and option contracts linked to commodity activities such as oil, wheat and even American interest rates.

Cboe owns the Vix volatility indices, stock option trading platforms and extensive stock trading and clearing activity in Europe.

Decisive acceleration

Stock option trading volumes have skyrocketed over the past year driven by fund managers who have sought to profit from the stock market rebound from the Coronavirus crisis.

Retail investors have also flocked to commission-free stock purchases thanks to options offered by brokers like Robinhood. The S&P 500 stock index has doubled in the past 18 months as the volume of options on tech stocks like Tesla, Appel or AMD has exploded.

If an agreement between CME and Cboe is concluded, the movement of concentration in the sector of operators of derivative products will experience a decisive acceleration. Already in 2019, more than half of the $ 35 billion in revenue generated by this industry came from just 5 stock market players: CME, Intercontinental Exchange, London Stock Exchange Group, Deutsche Börse and Nasdaq according to Burton-Taylor International Consulting.

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