MF Global ditch US Futures Exchange Thursday, December 18, 2008
Image via WikipediaI'm intrigued by the motives behind the decision by MF Global, announced today, to abandon its' interest in the US Futures Exchange in which it directly held at 48% stake.
The business was originally set up by Eurex to provide a competing offering to the dominant Chicago Mercantile Exchange. in the US. In 2006, when it was struggling to attract liquidity away from CME, MF Global took a sizeable strategic stake in the venture, with a view to ratching-up the competition in the market via an injection of its' own sizeable order flow and ultimately generating significant capital value for MF, given the heafty multiples that Exchanges commanded at that time.
The $7m annual cost of being involved in the venture is a relatively trivial sum for MF Global, which prompts me to wonder whether the current CEO's past positions, resultant beliefs and relationships have influenced this decision far more than the financials. Prior to joining MF Global in the Summer of 2008, Bernard Dan headed the Chicago Board of Trade (CBOT) where he served as president and chief executive officer from November 2002 until July 2007 when the company was acquired by the CME.