Under the terms of the memorandum of understanding, the CBOT would allocate about 78 percent of the equity ownership in a restructured CBOT among Full Members and about 22 percent of such equity ownership among Associate Members and GIM, IDEM and COM membership interest holders. In addition, the CBOT agreed to provide the Associate Members and GIM, IDEM and COM membership interest holders certain protections related to their trading rights and privileges, including protections related to future dues and transaction fees and preservation of trading rights with respect to those contracts which Associate Member and GIM, IDEM and COM membership interest holders currently are entitled to trade.
CBOT Chairman Charles P. Carey said, "We are pleased to have reached an agreement that is intended to serve the interests of all CBOT members and permit the Exchange to move forward in its efforts to restructure."
The dispute originally arose in 2000 in response to the CBOT's then proposed restructuring into a for-profit company and distribution of shares among its member classes. The CBOT's Board of Directors designated an Independent Allocation Committee composed of public, non-member directors to develop and recommend for the Board's further review and approval an appropriate and fair allocation among the members of the CBOT. With the assistance of its own legal and financial advisors, the Independent Allocation Committee made a recommendation to the Board to allocate about 88 percent of the shares among Full Members and about 12 percent of the shares among Associate Members and GIM, IDEM and COM membership interests in connection with the then proposed restructuring of the CBOT. The Board adopted the Independent Allocation Committee's recommendation.
The lawsuit initially was dismissed at the trial court level; that decision subsequently was reversed by the Illinois Appellate Court in July 2003. The parties have since engaged in intensive settlement discussions, which culminated in this morning's Board action.
