EUREX and CBOT Consider Renewed Alliance

The two largest futures exchanges in the world are considering a renewed alliance. The Board o f Directors of the Chicago Board of Trade (CBOT) voted overwhelmingly today to pursue a new alliance with Eurex, the European derivatives exchange. The vote by CBOT Directors came after officials from the Chicago exchange met with their Eurex (Deutsche Borse) counterparts over the weekend in Monte Rotondo, Italy. The exchanges had remained in contact since CBOT members in late January turned down a previous proposal to partner with Eurex. CBOT Chairman David P. Brennan said, "The time is now right for a business alliance with Eurex and it has my complete support. After my meetings with Eurex executives this weekend in Italy, I am confident that we have reformatted an alliance with Eurex that will result in increased efficiency, stronger technology and shared costs that will serve CBOT members well". CBOT President & CEO Thomas R. Donovan, who also participated in the meetings in Italy over the weekend, said, "This Eurex alliance will allow us to meet and beat all competition, while continuing to grow our business and provide global trading opportunities to our members". Eurex CEO Jorg Franke said, "We still think that a cooperation with CBOT would be advantageous for the exchanges and their memberships. But this is something that the CBOT management and its members will have to decide". CBOT Chairman Brennan said that he will schedule a membership vote on the renewed Eurex alliance before the end of June and will communicate further details of the proposed alliance to CBOT members in anticipation of that vote. Since the defeat of the original alliance proposal in January, and in light of competitive changes since then, Chairman Brennan and CBOT senior management, led by President Donovan, have been conducting a formal review of potential exchange and technology alliances, including comprehensive cost-benefit analyses. This review included an evaluation of the exchange's own electronic trading system, Project A. It was concluded over the weekend that a modified alliance with Eurex best served the CBOT.