CHICAGO — Investment professionals gave a thumbs-up to the merger of the Chicago Mercantile Exchange and Chicago Board of Trade, announced Oct. 17.
"(The merger) will be quite beneficial to institutional investors in the ability of the exchanges to achieve economies of scale in operations, product development and marketing," Joanne M. Hill, managing director and head of equity derivative strategies, Goldman Sachs, said in an interview.
"Some of the efficiencies gained would be passed along to users," she added. "This (merger) has been something that people in derivatives always thought made a lot of sense but for legacy reasons thought to be too difficult to achieve. But exchange competition from outside the U.S. helped to make this happen.
Richard A. Pike, president of RP Consulting Group, which provides derivatives consulting and risk monitoring services to institutional investors, said in an interview, "These two exchanges have been leaders in innovation and I don't expect anything to change there."
Steve Rodosky, executive vice president-portfolio management at Pacific Investment Management Co., Newport Beach, Calif., said in an interview: "I think the biggest benefit we'll see in the long run is a lot of strategies that rely on cross-exchange trading — such as Treasury futures (on the CBOT) and an offsetting position in eurodollar futures (on the CME) — incur bid/ask spreads on both pieces. I think they will start offering a lot of these cross strategies as bundled. That should narrow bid/ask spreads.