CME to buy CBOE for $16bn?

• FT:  CME, the world’s largest futures exchange operator, has offered 0.75 of its own shares for every Cboe share, according to three people familiar with the talks. The price would value Cboe at around $150 per share, around 20 per cent above its current price of $123.
• CME denies report of buyout bid for Cboe, saying 'inaccurate' report needed 'correction'
• All-share deal would combine futures and equity options specialists

  

A takeover would bring together two of the most important names in global financial derivatives. CME would diversify its product lines far beyond futures and options contracts related to such commodity markets as oil and wheat as well as US interest rates.

Cboe, formed out of a predecessor of CME in 1973, owns the Vix indices and contracts, as well as equity options exchanges, three stock exchanges and an extensive share trading and clearing business in Europe.

OCC, the US’s main options clearing house, said last month it had seen a record July, with nearly 800m contracts cleared, up 29 per cent on the same month a year before. Average daily volumes for the year are up 42 per cent at 37m contracts per day, the clearing house said.

If a deal is struck, it would extend the dealmaking spree among the world’s largest exchange groups, which are scaling up and concentrating the trading data and information that underpin financial markets among a handful of large players.

In 2019 just over half of the $35bn in revenues the industry generated came from just five exchange operators — CME, Intercontinental Exchange, London Stock Exchange Group, Deutsche Börse and Nasdaq.

In recent years LSE Group bought data and trading provider Refinitiv for $27bn while ICE snapped up mortgage software provider Ellie Mae for $11bn. It would also be the CME’s largest acquisition since its $7.9bn cash-and-shares purchase of the New York Mercantile Exchange in 2008.