To All Members & Staff:
Yesterday, we announced a series of initiatives designed to increase customer access and trading choices in our markets. These initiatives were approved by our Board at its meeting on Wednesday. The Board discussed fee changes during that meeting, and, after additional consideration on Thursday, approved a number of changes described below.
For the past 10 years, we have made significant investments in both floor-based and screen-based trading technologies that have enabled us to maintain our position as one of the world’ s leading exchanges. Now we are taking short-term and long-term actions that will allow us to improve our profitability and substantially grow our business.
The Board has called for the development and implementation by year-end of a long-term, comprehensive pricing strategy that encompasses all of the CME’ s products and services, addresses our broader strategic goals and positions the demutualized CME to effectively access the capital markets.
Although our investments during the past 10 years have been sizable, we have not raised clearing fees, and have even provided substantial clearing fee waivers or rebates, in recent years. To address our financial goals, the Board approved the following revenue-enhancing measures that will remain in effect until the new, comprehensive pricing structure is developed and implemented:
Instituting a new “give-up” fee of 5¢ per side, both to the executing and clearing firms, effective today; Assessing a new monthly brokerage fee of 5% to equity and lessee brokers on payments processed through the ATOM TM broker payment system, effective today; Increasing clearing fees for non-licensed products and for licensed E-mini products for members and non-members by 4¢ per side, effective Monday, September 11; Increasing clearing fees for all other licensed products for members and non-members by 8¢ per side, effective Monday, September 11; and Increasing annual dues of CME, IMM and IOM members to $1,000, effective January 1, 2001.
We are also conducting an ongoing functional review to reduce expenses and to ensure that our expenditures are appropriately aligned with our business objectives. As we reported to you yesterday, we have identified $7 million in expense reductions this year, with additional reductions expected in 2001.
These prudent financial decisions, in concert with Wednesday’ s Board actions to increase access and trading choices in our markets, will help us fulfill our mission and achieve our growth potential as a for-profit corporation.
