McGraw-Hill, CME Group Start S&P Dow Jones Indices Venture

McGraw-Hill Cos. (MHP) and CME Group Inc. (CME) said a joint venture to combine index businesses started today with the creation of S&P Dow Jones Indices.

CME Group, the world’s largest futures exchange, in 2010 agreed to take control of News Corp.’s stock-index business, owner of the Dow Jones Industrial Average, to bolster revenue by licensing equity benchmarks. The new business publishes indexes for 575 exchange-traded funds with $387 billion in assets and benchmarks that comprise $1.5 trillion, the companies said today in a statement.

McGraw-Hill, the New York-based finance and publishing company that’s splitting in two, owns 73 percent of the business, the companies said in the statement today. Chicago- based CME controls 24.4 percent and News Corp. (NWSA)’s Dow Jones & Co. indirectly owns the rest, the companies said.

CME will pay S&P Dow Jones Indices a share of the profits from listing, trading and clearing futures, options and swaps tied to its equity indexes.

As a part of the deal, S&P Capital IQ, a data business of McGraw-Hill, bought derivatives pricing service CMA from CME Group, Standard & Poor’s said in a separate statement. CMA, based in London, compiles credit-default swaps prices that are quoted by dealers in the privately negotiated market.

“This acquisition significantly expands S&P Capital IQ’s asset-class coverage for data and pricing and adds the technology to move into intraday quotes on derivative and other OTC securities,” Lou Eccleston, president of S&P Capital IQ and chairman of S&P Dow Jones Indices, said in the statement.

CME Group bought CMA in 2008 to help it expand into clearing credit swaps. No terms for McGraw-Hill’s purchase of CMA were disclosed.

S&P Dow Jones Indices recorded $421 million in revenue last year, the companies said in the statement.

To contact the reporter on this story: Matthew Leising in New York at mleising@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net