Cocoa In Focus In ICE, Nasdaq Bid For NYSE Euronext
April 01 2011 - 1:59PM
Dow Jones News
An unsolicited bid for NYSE Euronext (NYX) by Nasdaq OMX Group
Inc. (NDAQ) and IntercontinentalExchange Inc. (ICE) announced
Friday would have little impact on most soft-commodities futures
markets, industry members said, except one: cocoa.
If the $11.3 billion cash-and-stock offer is accepted and
approved by regulators, Atlanta-based ICE could acquire NYSE's
Liffe derivatives suite, including its commodities-futures
products.
Most soft-commodity contracts on the Liffe differ from those on
ICE, making consolidation nearly impossible. The ICE says it hasn't
yet outlined a proposal for how the commodities businesses would be
carved up, if at all.
Liffe trades white refined sugar, while ICE trades raw sugar,
and where the Liffe operates futures of robusta coffee, ICE
operates arabica coffee futures, products that to any trader are as
different as apples and oranges.
But cocoa is comparatively uniform, and the creation of a single
dollar-based contract would hurt some European traders.
"I would truly hate to see them pull that out because if they
change the London contract to a dollar-based contract, it would
probably really hurt the market," said Drew Geraghty, a broker at
ICAP Futures in New York.
He said having contracts in British pounds and U.S. dollars
provides some protection against currency risk for market
participants.
"It's a good vehicle," Geraghty said.
The London-based Liffe cocoa contract has about one-fifth
greater volume and is worth about $1.5 billion more than ICE's $5
billion cocoa-futures market, as of March 31.
"It would be a very big conflict to try to tie the two markets,
except that the deliverable locations are different," said Jack
Scoville, a vice president at Price Futures Group in London. "First
they have to get a deal."
A takeover of the Liffe is expected to have little impact on
other markets, aside from giving ICE greater control over
transaction fees.
"I think it's probably a pretty good deal for ICE," Scoville
said.
-By Leslie Josephs, Dow Jones Newswires; 212-416-4055;
leslie.josephs@dowjones.com
Forest Road Acquisition (NYSE:FRX)
Historical Stock Chart
From Aug 2024 to Sep 2024
Forest Road Acquisition (NYSE:FRX)
Historical Stock Chart
From Sep 2023 to Sep 2024