A couple of weeks ago we took note of a major development under way in the futures industry: the increasingly fierce competition between ICE and CME Group, particularly in light of the boost ICE is enjoying from higher volume in the Brent crude oil contract. That, plus the announcement that ICE has reached an agreement to purchase NYSE Euronext – potentially making it the third largest futures exchange in the world – demonstrates the rising stakes in their competition with the CME Group. Now there are reports that the CME may be considering a merger move of its own, joining up with the Eurex exchange in what could represent an unprecedented consolidation of the global futures trade. Bloomberg reports:

CME Group Inc. (CME), the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.

CME contacted the Frankfurt-based exchange at the end of last year, before IntercontinentalExchange Inc. (ICE) announced plans to buy NYSE Euronext on Dec. 20, said the people, who asked not to be identified as the information is private. Deutsche Boerse, which had its takeover of NYSE Euronext blocked by European regulators a year ago, is hesitant about entering discussions, the people said. Deutsche Boerse said it’s not in merger talks.

A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15 percent this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse gained 4 percent to 48.56 euros at 3:16 p.m. in Frankfurt today, the biggest jump since September, bringing its value to 9.37 billion euros ($12.5 billion).

Deutsche Boerse runs the all-electronic Eurex exchange, the world’s second-largest futures exchange which dominates the market for interest rate derivatives and equity index futures in Europe with products such as German Dax futures, Euro Bund futures, and the Euro Stoxx futures (they’re kind of like the CME of Europe in that regard).  But there are some very high hurdles to clear before this merger could become a reality. Will regulators who once blocked Deutsche Boerse’s bid for NYSE Euronext be convinced that this merger wouldn’t create an anti-competitive global market? Especially since the resulting entity would become the largest exchange in the world by a significant margin…

But what really strikes us about this report is the claim that these talks started months ago, making it appear as though this is not a reaction to ICE’s move to acquire NYSE Euronext. We’ve been hearing from the CME for a while that they have plans to expand into Europe; perhaps part of the plan all along was to threaten a battle for Europe to sweeten the sound of a merger between the world’s two largest futures exchanges.