Pacific Exchange to Weigh Other Alliances

Executives at the Pacific Exchange on Friday called the Chicago Board Options Exchange’s surprise decision to terminate the planned merger between the two “stunning and shortsighted,” and said PCX will continue to consider other alliances.

The two exchanges said in late July that they would merge into the world’s largest trader of options, which are contracts that allow investors to make bets on stocks or hedge their positions.

On Thursday, however, the CBOE abruptly terminated the agreement, citing time-consuming antitrust concerns by regulators and a need to devote attention to new trading technology.

In a statement Friday after a morning board meeting, Pacific executives seemed to dispute those reasons, saying its leaders and lawyers had met with the Justice Department and been assured that if requested information was provided to the department by Feb. 15, it would complete its review by April 1.

“We knew from the beginning that the Department of Justice would be a factor,” said Robert M. Greber, chairman and chief executive of the Pacific, who said Thursday morning that he and lawyers had just had a very “positive meeting” with regulators.

“When you arrive in San Francisco after an upbeat meeting with the Department of Justice in Washington and get a call that the merger you have been working on for 10 months is being canceled, it’s a little bit difficult,” he said.

Greber said the Pacific will consider other offers.

“We’ll be with someone else, most likely,” he said.

The PCX has most of its operations in San Francisco and a trading floor in Los Angeles. Its board Friday adopted a resolution expressing full confidence in its management and staff and said it will move forward.

“We had deferred a number of key projects, [including some options and equity projects,] anticipating the successful completion of this merger,” the exchange said. “Those projects will now be pursued with all deliberate speed.”