SPOOZ Inc (SPZI)

[songbirdia]

Up From The Pits (How the rowdy Chicago Merc became the world's biggest financial exchange)

Interesting article from Forbes.com

http://www.forbes.com/forbes/2008/0128/064.html

I won't copy the whole article (it's quite long), but here's an excerpt:


As a young broker in the hog pit of the Chicago Mercantile Exchange, Terrence A. (Terry) Duffy learned how to break up fights. It was a boisterous place where traders signaled, shouted and elbowed their way to buy and sell futures contracts. By waiting for the bruisers to wear themselves down, Duffy could step into the middle of an altercation and avoid getting hit. "Make sure they're tired first," he says. He must have been saving his strength for bigger fights.

Now executive chairman of CME Group, Duffy, 49, has duked it out with rivals--as well as with friends and customers--to create the world's biggest financial exchange. Biggest, that is, in notional value traded, at $5 trillion a day, and jockeying for biggest in market capitalization, at $35 billion. (Corresponding numbers for nyse Euronext: $2.6 trillion and $21 billion.) Over the six years of Duffy's tenure CME has embraced electronic trading, gone public, acquired its onetime largest competitor and increased daily volume from 2.2 million to 14 million contracts. It has pioneered new financial instruments for institutions and attracted individuals ( see box) with futures for stock indexes, real estate prices and the weather. Because its futures markets are de facto monopolies, CME, unlike most stock exchanges, has been able to hold steady the fees it collects--63 cents, on average, per contract, on both sides of every trade, compared with 65 cents five years ago. Its operating margin (Ebitda divided by revenue) of 60% puts it even with Goldman Sachs (nyse: GS - news - people ) and well ahead of Microsoft (nasdaq: MSFT - news - people ). Over the 12 months ended Sept. 30, CME Group, including the recently acquired Chicago Board of Trade, netted $763 million on revenue of $2 billion. Under Duffy, shares have jumped eighteenfold to a recent $621.