"The National Grain Trade Council continues to have its finger on the pulse of American agriculture, and I know the members of the CBOT® greatly appreciate your backing on key issues affecting the futures industry. Your support for the necessary changes to the CBOT®’s grain delivery system was critical to our successful presentation before the CFTC. Your efforts to seek streamlined CFTC regulations that are in keeping with today’s competitive and global marketplace resulted in the reform legislation that was passed in December and signed into law by the President.
"The Chicago Board of Trade is very appreciative of the positive relationship we have enjoyed with the National Grain Trade Council throughout the years, and as Chairman I intend to do whatever I can to strengthen the dialogue between our two organizations for the betterment of both.
"Let me begin by sharing with you my guiding principle for the CBOT®. I see 2001 as a year of major change at the Exchange as we move to complete our restructuring strategy and go from a member association to a for profit entity. As Chairman, I want to increase the overall value of the CBOT®, whether that means an electronic future, open outcry, or some combination of the two. That is what "for profit" means to me. Both electronic and open outcry markets will be part of our business plan. We intend to provide the best of both markets, and let the customer decide where they want to put their business, as long as we keep it at the CBOT®.
"My principle objective as Chairman of the CBOT® is to increase the overall value of our enterprise. This means recognizing the importance of our open outcry and electronic markets and doing what is necessary to make them as competitive and as technically efficient as possible. The CBOT® has to constantly look at how we can get orders processed and cleared in the most cost-efficient manner possible in order to provide the users of our markets with the best level of service possible.
"Grain producers, processors and merchandisers often mention to us that fast fills and efficient order routing are critical. We realize our customers get frustrated when the process gets backed up. We know our customers demand and deserve quick and efficient markets. So we listened to your concerns and did something about it.
"With our Electronic Open Outcry Market, we are making it possible for customer orders to get in and out of our agricultural trading pits in seconds and at a lower cost. Our goal is to eliminate paper – eliminate the runner on our trading floor and electronically route orders directly to the broker in the trading pit. We are making tremendous progress on our order routing initiative, and we are capturing more order flow electronically – routed either to or from the pit. And we are committed to doing more.
"Last year more than 3.8 million orders at the CBOT® were sent electronically directly to pit brokers, compared to 2.1 million in 1999. Electronic replacement of 3.8 million pieces of paper, formerly processed manually, has created substantial efficiencies for brokers and member firms.
"Last year more than 36% of all agricultural futures orders were routed electronically, direct to brokers using electronic order receipt devices. Firms like Iowa Grain, Cargill Investor Services, and ADM, for example, are providing their customers on average trade confirmations on market orders in less than one minute. More than 75% of the most active brokers use electronic devices to manage and endorse customer open outcry market orders at the CBOT®. This is significant progress, but we are going to work hard to improve upon those numbers in 2001.
"We have dedicated $8 million in our 2001 budget to further upgrades of our order routing system, which will allow us to add spreads to the system. This, plus three to four months of additional experience to demonstrate the stability of the system, will allow us to reimpose mandates on firms to use the electronic order routing system, which will lead to further efficiencies.
"I believe in strong customer service. I know customer orders are the reason the CBOT® exists today. I recognize the value of those relationships, and I am committed to doing whatever I can as Chairman to keep and strengthen them. Our members are dedicated to making markets. If we can continue to electrify our open outcry markets, and continue to strengthen our electronic marketplace, we can enhance member opportunity while providing even better service for the users of our markets. This is something that is good for everyone."
For a complete text of Chairman Neubauer’s remarks, please contact Maria Gemskie in the CBOT® Communications Department at 312-341-3257 or by email at mgem46@cbot.com For more information on the CBOT®, go to www.cbot.com
While the Board of Trade of the City of Chicago, Inc. (CBOT® ) has filed a Registration Statement on Form S-4, including a preliminary proxy statement and prospectus, regarding the restructuring transactions with the SEC, it has not yet become effective, which means it is not yet final. CBOT® members are urged to read the final Registration Statement on Form S-4, including the final proxy statement and prospectus, regarding the restructuring transactions referred to above, when it is finalized and distributed to members, as well as the other documents which the CBOT® has filed or will file with the SEC, because they contain or will contain important information for making an informed investment decision. Members may obtain a free copy of the final prospectus, when it becomes available, and other documents filed by the CBOT® at the SEC’s web site at www.sec.gov. 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.
