February, 05 , 2010

With regulations looming that could weaken the financial might of U.S. exchanges, Chicago's trading industry is counting on what's commonly considered a sure thing.From most angles, the exclusive right to list indexes such as the Dow Jones industrial average and Standard & Poor's 500 looks like the safest bet around. But even those slam-dunk money-makers could be vulnerable under proposals taking shape on Capitol Hill.

Chicago's CME Group Inc. is said to be bidding as much as $700 million for News Corp.'s Dow Jones index division, which reportedly generates licensing revenue of just $90 million annually.The high price reflects monopoly power: Owning the indexes would enable the exchange to continue capturing practically all the volume while charging relatively high trading fees.Similarly, the Chicago Board Options Exchange is banking on exclusive contracts such as its S&P 500 to boost results ahead of an expected initial public offering later this year. Most of its other core products face head-to-head competition on rival option marts.

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