Japan, Chicago Join on Derivatives Effort - WSJ.com
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September 3, 2008
Japan, Chicago Join on Derivatives Effort
By SERENA NG and AYAI TOMISAWA
September 3, 2008; Page C3
Chicago and Osaka, Japan, are teaming up to dream up ways of trading
derivatives.
Wednesday, Chicago Mercantile Exchange parent CME Group Inc. plans to sign
an agreement with the Osaka Securities Exchange to develop products and
services that could give their customers greater access to global markets.
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The pact with Japan's largest derivatives exchange comes as CME, the world's largest futures exchange by trading
volume and market capitalization, seeks to broaden its global presence.
Investors are looking for trading opportunities across asset classes and national borders, and exchanges around the
world are linking up in an effort to make such investments more seamless.
CME last month completed its $8.2 billion acquisition of Nymex Holdings Inc., parent of the New York Mercantile
Exchange. The deal gave CME, which also owns the Chicago Board of Trade, a 98% share of listed futures trading in
the U.S.
The group has also been expanding abroad, mainly through ventures and technology-sharing arrangements with
exchanges in Asia and elsewhere.
CME and OSE have listed futures contracts on Japan's Nikkei Stock Average through
licensing agreements. The exchanges' different trading hours effectively allow investors
to trade these contracts round the clock. CME Chief Executive Craig Donohue said the
two companies will seek offerings that will benefit their customers.
OSE President Michio Yoneda said he hopes more foreign investors will soon be able to
access OSE's products more directly.
The OSE is trying to increase trading amid growing pressure among smaller Japanese
securities exchanges to consolidate.
In 2007, the volume of listed futures and options traded at OSE topped 100 million
contracts for the first time, and was nearly 80% higher than a year earlier. OSE's volumes
this year are close to 2007 levels. CME has benefited from rising trading activity, but
some investors fear the credit crunch may lead banks and hedge funds to cut back on their
derivative trades.
Write to Serena Ng at serena.ng@wsj.com1 and Ayai Tomisawa at ayai.tomisawa@dowjones.com2
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Japan, Chicago Join on Derivatives Effort - WSJ.com
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