CME's Purchase of Kansas City Board of Trade

CME’s Purchase of Kansas City Board of Trade

I’m KayDee Gilkey with the Market Line Report for Nov. 26, 2012. ?
With the Commodity Markets having a quiet and rather slow week last week. Today we will discuss last month’s announcement of the CME Group’s purchase of the Kansas City Board of Trade.

The CME Group has agreed to buy the Kansas City Board of Trade for 126-million dollars in cash.

The historic exchange is the leading futures market for hard red winter wheat. In the news release announcing the purchase, CME Group Executive Chairman and President Terry Duffy says the acquisition will give the CME the ability to develop new products that will benefit both futures and options clients and provide new trading opportunities for market participants

Alan Brugler of Brugler Marketing and Management in Omaha sees several advantages with the acquisition.

Brugler: “I think it is positive, it may not be if you are a KC locals or people on the floor. I think that the merger is overall good for efficiency, it will open up some opportunities for new contracts or new spreads a little more efficient if they are all inside the CME Group Umbrella. I hoping we will get better options liquidity after the merger, that has been a problem in Kansas City due to not enough traders trading it. So I think there are some positive.

The CME Group states they’ll maintain the Kansas City Board of Trade trading floor for at least six months. But Brugler thinks it’s only a matter of time before it closes.