CDS Delivery Option: Better Pricing of Credit Default Swaps

9 Bringing the Index to an Exchange

As it happened, the timing for bringing the index to an exchange could not have been worse. In 2006, the Chicago Mercantile Exchange (CME) agreed to purchase the Chicago Board of Trade (CBOT) by mid-2007. As time went on, it became clear how ill prepared the CME was to complete the transaction. They had plenty of cash, but it seemed that in every other way the opposition to the deal surprised them. Apparently there was no devil's advocate in the exchange, and no one foresaw a rival bid by the Intercontinental Exchange (ICE), a small Philadelphia exchange backed by a number of Wall Street dealers. The CME also ...