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The Cost of Clearing

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					The Cost of Clearing


  Futures & Options
      Expo 2002
Thursday, November 7th
                        The Cost of Clearing


Moderator

•   Mark D. Connelly, Senior Manager, American Express Tax and Business Services Inc.

Panelist

•   Satish Nandapurkar Managing Director, Products and Services, Chicago Mercantile
    Exchange
•   Jill Harley Vice President and Treasurer, Chicago Board of Trade
•   Tom Croke Vice President of Operations, Lehman Brothers
•   Rick Walsh Senior Vice President, Product Design, Rolfe & Nolan (USA) Inc.
•   Bill Metzger Clearing Manager - Vice President, J. P. Morgan Futures Inc.
            The Cost of Clearing

Manage and contain the cost of clearing
 (clearing and exchange fees) between
 Exchanges/FCMs/Service Providers in
 order to create a “win-win”environment for
 all
            The Cost of Clearing

We would like all participants to leave today
 with at least one/two meaningful ideas that
 you could use in your quest to manage and
 contain the cost of clearing (exchange and
 clearing fees)
                    The Cost of Clearing

  Basis for Discussion: Exchanges/FCMs/Service Providers



What two/three areas regarding fees do you feel you do well?

What two/three areas regarding fees do you feel you need to do better?
                 The Cost of Clearing

                     Historical Retrospect


• 1992 - 2001 CBOT and CME Fee Highlights
• Current CBOT and CME Fee Schedules
• Five-Year (1997 - 2001) and 2002 nine-month CBOT and CME
  Volume and Revenue Statistics
                       The Cost of Clearing
                 1992 - 2001 CBOT and CME Fee Highlights

•   CBOT (1992)
        Member $.02/side       Customer $.50/side
        Delegate Tiering (1992) Trade on a leased seat, you paid between
        $.02 - $.30/side based on how long you were a lessee.
        Project A and Ceres Fees (1994) Introduction of electronic trading (Dual
        platforms). Same exchange fee (based on membership type) but Ceres fee based
        on product type and CTI coding.
        Open Outcry and ace Trading (September 2000)
        Open Outcry: $.05/side for owner, $.20/side delegate (no tiering), $.50/side
        customer and $.75/side customer licensed product.
        ace: $.25/side for owner, $.45/side for financial delegate,
        $.75/side for delegate, $.80/side for financial customer and $1.25/side for
        customer.
                        The Cost of Clearing
                 1992 - 2001 CBOT and CME Fee Highlights
•   CME (1993 - July 1997)
          Type                  Future                 Option
          Equity                $.07/side              $.07/side
          106D/F                $.30/side              $.10/side
          106H/J/N              $.50/side              $.14/side
          CBOE                  $.60/side              $.25/side
          Customer              $.70/side              $.35/side
    GLOBEX (1996) Introduction of electronic trading (dual platforms);
    System Fee (everyone paid) and Customer Fee.
    Fee Changes (August 1997 to September 2000) Various
          changes/reductions/increases during this timeframe.
    EFS System (July 2000) Online transactional viewing and adjustment facility to
          monitor fees.
    Product Type (October 2000) Fees based on product type.
                       The Cost of Clearing
                   Current CBOT and CME Fee Schedules

•   CBOT
    Open Auction
         Individual Member      $.05/side
         Proprietary account    $.06/$.05/$.04 side
         Delegate               $.20/side
         Customer               $.50/$.40/$.30 side (financials); $.60/$.50/$.40 side
                                (agricultural)
    ace
          Individual Member     $.15/$.13/$.10 side
          Proprietary account   $.35/$.30/$.25 side
          Delegate              $.30/$.28/$.25 side
          Customer              $1.25/$.95/$.75 side (financials); $1.50 (agricultural)

          e-cbot                $.50/$.45/$.40 side
                      The Cost of Clearing
                  Current CBOT and CME Fee Schedules
•   CME

    Open Outcry
        Equity and 106 I              $.05 - $.15/side
        106 D/F                       $.25 - $.38 side
        106 H/J/N                     $.245 - $.58/side
        NYMEX                         $.24 - $.585/side
        CBOE                          $.32 - $.78/side
        Customer                      $.32 - $.78/side
    GLOBEX
        System Fees                   $.25 - $.50/side
        Customer Fees (NYMEX)         $.085 - $.50/side

          Customer (including CBOE)   $.25 - $1.00/side
               The Cost of Clearing
       CBOT Revenue and Volume Analysis (1997 - 2002)

                 Volume (Contracts)           Revenue
            Open Auction     Electronic          $

1997         236,769,000     5,929,000       76,793,000
1998         268,850,000    12,339,000      112,115,000
1999         243,401,000    11,160,000      102,545,000
2000         218,016,000    15,512,000      101,981,000
2001         207,774,000    52,559,000      129,030,000
2002         163,527,000    89,477,000      151,802,000 (est)
              The Cost of Clearing
       CME Revenue and Volume Analysis (1997 - 2002)

               Volume (Contracts)             Revenue
           Open Auction     Electronic           $

1997        196,346,000       4,396,000     116,917,000
1998        216,897,000       9,722,000     126,524,000
1999        184,678,000      16,059,000     140,305,000
2000        196,674,000      34,436,000     156,649,000
2001        329,782,000      81,931,000     292,459,000
2002        282,105,000     131,685,000     261,400,000
        The Cost of Clearing


CBOT and CME Projected Revenue 2002

      CME      340,000,000 (Est)
      CBOT     200,000,000 (Est)
  The Cost of Clearing


CBOT and CME Projected
Combined Revenue 2002


   540,000,000
    The Cost of Clearing




Question and Answer Session

				
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