The Board of Directors yesterday discussed a petition submitted by several members regarding a proposed member fee preference that would apply to the trading of all CBOT® products. The Restructuring Report that was issued in connection with the June 28, 2000 ballot proposed a three-year member fee preference. Since then, the Executive Committee has listened carefully to the views expressed by many members on this subject, and met yesterday with several representatives of the petitioners in order to better understand their precise intent given certain ambiguities in the language of the petition.
The Executive Committee concluded that the petition failed to make clear: 1) whether member firms as well as members trading in their individual capacity would be entitled to the preference; and 2) whether delegates would be entitled to the preference.
As a result, and in light of those ambiguities, the Board of Directors yesterday rejected the petition as written. Instead, the Board adopted at yesterday’s meeting a regulation which fundamentally captures the intent of the petition:
Regulation 450.05--Members and member firms will be granted lower fees than non-members.
The Board of Directors will shortly provide to the membership further guidance as to the acceptable attributes of a member firm or proprietary trade and has affirmed that delegates will remain subject to higher trading fees than members but lower fees than non-members. In connection with the Board of Director’s adoption of the foregoing regulation, the Board has undertaken to include a corresponding provision in the Articles of Incorporation that will be appended to the demutualization proposal that will be submitted for member approval once the SEC declares our registration statement effective. Under Delaware law, the Articles of Incorporation can only be modified with both Board and member approval.
I will keep you informed of further developments as they occur.
Sincerely,
David P. Brennan
The CBOT®® urges its members and membership interest holders to read the Registration Statement on Form S-4, including the proxy statement/prospectus contained within the Registration Statement, regarding the CBOT®® restructuring referred to herein or in connection herewith, when it becomes available, as well as the other documents that the CBOT®® has filed or will file with the Securities and Exchange Commission, because they contain or will contain important information. CBOT®® members and membership interest holders may obtain a free copy of the proxy statement/prospectus, when it becomes available, and other documents filed by the CBOT®® at the Commission's web site at www. sec.gov, or from the CBOT®® by directing such request in writing or by telephone to: Board of Trade of the City of Chicago, Inc., 141 W. Jackson Blvd., Chicago, Illinois 60604-2994, Attention: Office of the Secretary, Telephone: (312) 435-3605, Facsimile: (312) 347-3827. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state in which offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
