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CBOT eyes for-profit status
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July 21, 1999: 4:14 p.m. ET
Futures exchange OKs study to shake up structure amid tough competition
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NEW YORK (CNNfn) - Directors at the Chicago Board of Trade agreed Tuesday to develop plans to become a for-profit exchange, Chairman David Brennan said Wednesday in a letter to members.
The vote paves the way for an a panel to examine ways of issuing stock, either publicly or privately. The CBOT, a top futures exchange where both financial and agricultural products are traded, has 3,400 members and 27 board members.
Brennan has led the call for the CBOT to shake up its structure, which he considers too rigid as nimble competitors such as Cantor Fitzgerald, Nasdaq and other such exchanges threaten the CBOT's market. He said for-profit status will ease decision-making.
"Frankly speaking, our current governance structure does not allow us to enact decisions and mobilize financial resources with the speed required in today's electronic marketplace," Brennan wrote. "It worked well for 150 years, but it is not the structure a company would use if starting a successful new exchange today."
He said CBOT directors now will assess the financial possibilities of a restructuring and study how to separate equity ownership from the trading rights of each member.
Any plan would have to be approved by the CBOT board and membership. No timetable has been set for such votes.
CBOT members in June approved an alliance with Eurex, the all-electronic German-Swiss exchange. The linkage between the predominantly pit-based CBOT and Eurex is set to start in mid-2000.
While several exchanges are said to be looking into for-profit status, Eurex is one of the few in the world that operates as a for-profit exchange.
-- from staff and wire reports
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Chicago Board of Trade
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