Groomed for Success: The Chicago Merc Has Experienced a Series of Recent Successes That Would Have Seemed Improbable a Few Years Ago When They Searched for a Leader to Steer Them through Demutualization and Challenges from More Agile Fully Electronic Competitors. with a Future That Looks Brighter-Though Challenges Are Ever Present-The CME Will Carry on with a New Man at the Top

By Collins, Daniel P. | Modern Trader, November 2003 | Go to article overview

Groomed for Success: The Chicago Merc Has Experienced a Series of Recent Successes That Would Have Seemed Improbable a Few Years Ago When They Searched for a Leader to Steer Them through Demutualization and Challenges from More Agile Fully Electronic Competitors. with a Future That Looks Brighter-Though Challenges Are Ever Present-The CME Will Carry on with a New Man at the Top


Collins, Daniel P., Modern Trader


While the announcement that Chicago Mercantile Exchange (CME) President and CEO Jim McNulty, the man the exchange brought in to take it public, would step down at the end of the year was a shock to some, the move was not a surprise to those familiar with the CME.

McNulty's replacement, Craig Donohue, has been the architect of much of the CME's strategic planning over the last seven years and has been carefully groomed--even at the behest of McNulty--for the top spot. One year before the announcement, the CME articulated a succession plan that had at its core the creation of an office of the CEO. The office consisted of McNulty and Donohue and Donohue has been prominently featured in all of the CME marketing material.

While the CME Donohue is taking over appears to be in much better shape than when McNulty took the reins, it faces serious competition. Futures sat down with Craig Donohue and discussed those challenges and the long-term strategic plan of the CME that he helped to develop.

Futures: Was the announcement that Jim McNulty would leave at the end of the year a shock?

Craig Donohue: it wasn't a shock. Last October we put in a succession plan for the office of the CEO and Jim and I have been working closely together.

FM: What will be your priorities as you take over the office of CEO?

CD: We are going to remain on track with our current strategy. I was a major force in helping develop the current strategy. [Donohue was in charge of strategic planning for the last seven years.]

We are going to continue to expand our core business, expand distribution of our Globex system, add new products, pursue our transaction processing services strategy and selectively pursue joint ventures, alliances and perhaps mergers and acquisitions.

Our single highest priority as an exchange right now is making sure that we deliver successfully with the Board of Trade and with their partners at Euronext Liffe the CME/CBOT common clearing link. The project is progressing well.

We are going to continue to bring innovative new products and technology to market. We have a whole series of technology initiatives aimed at further enhancing Globex reliability and customer satisfaction. We are also working on further releases of our Eagle functionality that we expect to bring out by year-end and again next year to further increase the range of trading strategies and functionalities that people can use to trade our eurodollar contract.

On the product side, we've got a wide range of things we are looking at in each of our different product sectors. We have been very focused in the last number of months and my priority is going to be to make sure we remain focused on two things; one is maintaining our history of innovation and the other one is making sure that we execute as an exchange and that we bring these innovative technology and product enhancements to market in a successful way. When you look at our history as an exchange that has been the thing that has defined our competitive advantage, our ability to innovate but also our ability to execute.

FM: There have been several instances of technical glitches with Globex due to the expanding trading volume in E-minis. Have you corrected them?

CD: That was certainly a good problem to have. We have been doing a good job of catching Lip with ourselves in terms of growth. We are managing capacity and reliability very effectively right now. We will be successful in bringing some of these new functionalities to market in a timely fashion.

FM: Will the matching engine be able to handle that type of growth?

CD: Keep in mind that we do not have just a single matching engine; we have [designed] our technology infrastructure in a way that allows us to have multiple matching engines underneath our order routing infrastructure. Part of the reason for that is that given the breadth of product that we have--not only today but the breadth of product we envision trading in the future--we don't believe there is one matching engine that meets all the unique needs of different market structures mad different types of trading instruments. …

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Groomed for Success: The Chicago Merc Has Experienced a Series of Recent Successes That Would Have Seemed Improbable a Few Years Ago When They Searched for a Leader to Steer Them through Demutualization and Challenges from More Agile Fully Electronic Competitors. with a Future That Looks Brighter-Though Challenges Are Ever Present-The CME Will Carry on with a New Man at the Top
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