Spent an interesting week in Boca Raton at the title="FIA conference"

href="http://www.futuresindustry.org/boca-2011.asp"

target="_blank">FIA's annual conference

which brings together the top executives from the global futures

industry to debate what lies ahead. The event had extra spice

this year as

href="http://fragmentation.fidessa.com/2011/03/01/feeding-frenzy/"

target="_blank">the recent wave of merger mania in the

exchange space has placed a high premium on those

venues that have - or that can create - a

derivatives capability. Because derivatives exchanges own the

products being traded, rather than simply providing a

marketplace, derivatives venues are better able to protect

margins and fight off competitors than their equities-only

counterparts. Just look at the success of

href="http://www.cboe.com/micro/VIX/vixintro.aspx"

target="_blank">CBOE's VIX contract which

is now widely regarded as a universal (and tradable) fear gauge

of overall financial market sentiment.

This

fact helps explain why derivatives are becoming such an important

part of the changing exchange landscape. And of course they are

attracting their own share of regulatory attention with plans

afoot to move the OTC market onto exchange and increase its

overall regulatory transparency. In Europe especially, the

potential merger between

href="http://deutsche-boerse.com/dbag/dispatch/en/kir/gdb_navigation/home"

target="_blank">Deutsche Börse and title="NYSE Euronext"

href="http://www.euronext.com/landing/indexMarket-18812-EN.html"

target="_blank">NYSE Euronext would combine both the

href="http://www.euronext.com/landing/liffeLanding-12601-EN.html"

target="_blank">Liffe and

href="http://www.eurexchange.com/index.html"

target="_blank">Eurex markets into a potent force.

Maybe the price for allowing the merger to go ahead will be that

some sort of fungibility (or other clearing compatibility) is

mandated by Brussels. If that were to happen then expect every

venue to launch its own variant of the major derivatives

contracts.