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CME, Deutsche Boerse deny any attempt to join forces

A trader CME Group signals S P 500 Futures pit Chicago. AP file photo

A trader at the CME Group signals in the S&P 500 Futures pit in Chicago. AP file photo

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Updated: March 27, 2013 6:11AM

A source close to CME Group Inc. said Monday the company is not in talks to merge with Deutsche Boerse AG, disputing a report that incited trading in both companies’ shares.

“There’s zero. There’s nothing going on,” the source said. He was responding to a report by Bloomberg News that CME, owner of the Chicago Mercantile Exchange and the Chicago Board of Trade, had approached Deutsche Boerse about a deal.

Deutsche Boerse owns the Frankfurt Stock Exchange and Eurex, the largest futures exchange in Europe. CME owns the largest futures markets in the United States and has been attempting to gain a foothold in Europe.

Analysts said the two companies could make a compelling match, but Deutsche Boerse has been disappointed before when walking down the merger aisle. A year ago, it tried to take over NYSE Euronext, the owner of the New York Stock Exchange, but European regulators blocked the deal.

For its part, Deutsche Boerse issued a strongly worded denial of any current discussions with CME. Its comments reflected company leaders’ recent statements that a large-scale merger was not in the offing.

“As repeatedly communicated, Deutsche Boerse Group’s primary strategic focus is organic growth, mainly by expanding its business into growth regions in Asia, extending its services for unsecured and unregulated markets and expanding its combined market data and [information technology] business,” the statement said.

A CME spokesman had no comment. Bloomberg attributed its report to four people “familiar with the situation” and said discussions began late last year.

The source close to CME, who asked for anonymity because he is not authorized to speak for CME, said that if there was any contact with Deutsche Boerse, it amounted to little more than executives bumping into each other at an industry meeting.

The report caused volume in Deutsche Boerse shares to skyrocket and their price to jump 5.6 percent, or 2.62 euros, to 49.30 euros, or about $64.42, Monday. CME shares traded at higher than average volumes and declined 53 cents, or 0.9 percent, to $57.78.

CME has a market value of $19.2 billion, while Deutsche Boerse is worth about $12.5 billion.

Both companies have been dealing with declines in trading volumes dating from the recession in 2008, but there also are pressures in the business for consolidation. NYSE Euronext has agreed to an $8.2 billion takeover by a CME rival, IntercontinentalExchange Inc.

However, CME historically has been reluctant to go outside the futures business and buy a stock exchange. Futures answer to different federal regulators than the stock market and can be more complex to administer.

“It’s not just plug and play,” said the source close to CME. “The way we are situated right now, we are in pretty good shape.”

Through Eurex, Deutsche Boerse made a failed bid to grab U.S.-based market share from CME. The German company’s only significant operation in the United States is the International Securities Exchange, the country’s third largest stock-options market but much smaller than the leader, the Chicago Board Options Exchange.

With a portfolio that includes the New York Mercantile Exchange, CME’s markets include futures on crops, stock indexes, interest rates, oil and gold.

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