Yesterday the Chicago Board of Trade and the Chicago mercantile exchange signed a deal to join forces and remove one of the last real time governors (regulator) on the global economy setting the stage and putting in the last mechanisms for a massive redistribution of wealth.

David Easthope, analyst at Celent, a Boston-based financial research and consulting firm, also praised the blockbuster deal. “The Chicago Mercantile Exchange already derives revenues from trading activities to rival the major cash equities exchanges, and it does so very profitably. The addition of the CBOT via a merger only makes the CME a bigger futures marketplace,” he said. Executives said serious talks between the two leading U.S. futures exchanges have been under way for nearly a year. Trading in derivatives — contracts whose value is based on the performance of an underlying financial asset, index or other investment — has skyrocketed in recent years with the increased sophistication of investors able to buy and sell easily online. According to the Bank of International Settlements, trading on global derivatives exchanges increased from 341 million contracts in 1986 to 6.2 billion in 2004, up about 18 percent annually. Commodities and stock exchanges seeking to capitalize on that growth have been under increased pressure to consolidate in order to lower trading costs and make buying and selling easier. The pressure stepped up last month when the Intercontinental Exchange Inc. announced a $1 billion deal to acquire the New York Board of Trade.

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