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- William Deresiewicz

Is it time to sell (yet)?

“Buy, buy, buy” is how the Economist headlined its timely briefing on financial exchanges this week:

TRADERS cannot resist a bet, even on their own fate. Amid a bidding war over Chicago’s derivatives exchanges, the US Futures Exchange, also based in the Windy City, has launched a “binary” contract which allows speculators to take a punt on whether the IntercontinentalExchange (ICE) can snatch the Chicago Board of Trade, America’s oldest derivatives exchange, from the grasp of the biggest, the Chicago Mercantile Exchange (CME). Until recently ICE, a fast-growing electronic upstart from Atlanta, had the edge. Then the CME upped its offer to $9.8 billion and its chances of success—as measured by the binary contracts—leapt to over 70%.

(But of course, trading on binaries based on the outcome of a possible merger battle is NOT gambling. And of course it is unlikely anyone is doing it in their BATHROBE…so Rep Frank Wolf needn’t worry…)

I’m going to keep this short and sweet – I wonder if today’s existing (and/or planned) mega-exchanges don’t resemble the giant incumbent telecom companies c. 1998?AT&T Share price history

(…and of course I’m not just talking about the share price…and are Reg NMS and Mifid analogous to the Telecoms Act of 1996?)

History never repeats itself – exactly – but if I’m right, there are fortunes to be made and lost over the next decade in this arena, and – more importantly – I’d suggest they aren’t the ones most people are currently discounting.

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