Eurex, the subsidiary of Deutsche Borse and SWX, has broken into the lucrative US Options market with a proposed deal to buy ISE (the International Securities Exchange). The deal challenges the hegemony of NYSE/Euronext and the putative CME or ICE takeover of CBOT as the number one global derivatives exchange. The deal was seemingly a surprise to the markets and much of the analyst noise appears to think that the premium paid was significant. However the deal does conceptually make a lot of sense for all parties. Perhaps most interestingly ISE is an options and not a futures exchange. Eurex actually attempted to break into the US futures market last year (and has since sold that business to MAN Financial). Options however makes a lot more sense to me as , unlike US futures contracts, they are fungible and can therefore be cleared centrally through the Options Clearing Corp. rather than only on the exchange traded on. They can also therefore be opened on one exchange and closed on another - thus having important implications for liquidity.

I somehow doubt that these will be the only deals in the coming months as the exchanges continue to consolidate and jockey for the global business so watch this space...

Elsewhere, apart from being busy trying to steal the CBOT from under the noses of the Chicago Mercantile Exchange, ICE (the Atlanta based Intercontinental Exchange) has announced that is will be launching a European clearing house. This service will be a blow to LCH.Clearnet which currently services ICE's European energy and commodity contracts, but was a logical next step following their purchase of NYBOT and its New York Clearing Corp subsidiary earlier this year. The service will be called ICE Clear Europe and is scheduled to start clearing energy futures and OTC contracts by mid 2008.