Merc, Comex See Progress in Merger Talks

The Commodity Exchange and the New York Mercantile Exchange are progressing in their talks about a possible merger, but the outcome of the negotiations is uncertain, officials said Tuesday.

Merger committees have met several times since they were formed in the fall, and last week governing boards of the exchanges met informally and agreed that a serious and more active consideration should be undertaken, said Rosemary McFadden, president of the 115-year-old Mercantile Exchange.

“But that doesn’t mean it’s a done deal by any means,” she said. “There’s a lot of committee work to be done by both sides.”

The Merc traded 14.6 million contracts last year and is the nation’s third-largest exchange and the world leader in oil futures. The 54-year-old Comex, the leader in precious metals, follows closely with 14.2 million contracts traded in 1986.

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The nation’s largest futures markets are the Chicago Board of Trade with 81.1 million contracts last year and the Chicago Mercantile Exchange with 59.8 million.

Merger talks between the two New York exchanges date back to 1975, McFadden said, “but now the discussions have a much more formal form and a higher level of priority.”

The exchanges, with new board and younger membership, seem more open to the merger idea, she said.

The advantages of merging, McFadden said, include not only economies of scale but a wider variety of contracts to trade if one of the exchanges enters a dull period. Severe space problems on the trading floor shared by the exchanges could probably be better worked out under a single leadership, she said.

Committees will assess potential problems such as differences in trading systems and clearing operations, margins, market guarantees, legal liabilities and seat values, said McFadden.

Any agreement to merge would be subject to approval by the exchange boards and memberships as well as the Commodity Futures Trading Commission.