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CBOT War: Brokers Versus Exchanges

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At some point in the mythical past the relationship between the exchanges and broker-dealers could supposedly be described as “cozy” but that was before the exchanges started piling on the fees and brokers started sleeping around with alternative trading platforms. The top guy covering this little lovers-spat-turned all-but all-out war is Reuter’s Jonathan Keehner, and this morning he’s gives it to us like Rose McGowan in the backseat of Kurt Russell’s car.
That’s not actually a helpful description? Fine. Here’s the deal. Keehner’s big story today is that the bid for the Chicago Board of Trade from IntercontinentalExchange may have been inspired, in part, by a broker backlash against “the potential power of a combined” CBOT and Chicago Merc. We did a little digging into the ownership and sure enough, the biggest brokerages have stakes in ICE but aren’t so much down with the Merc. In short, it looks a bit like the brokers are bidding to takeover the CBOT or at least keep it out of the hands of the Merc-enaries.
The Keehnster goes further, describing the role that a lot of the larger futures players have in advising ICE.

Banks that are among the largest futures players have signed on to advise ICE, whose innovative proposal for CBOT has at the least created a roadblock to the consummation of a marriage between the two largest U.S. futures markets, each of which has called Chicago home for decades.

ICE bid for CBOT may stem from broker backlash [Reuters]