From: Thomas M. Harris
I am a full member of the CBOT and also a full member at the CBOE. As such, I am in a unique situation because regardless of the Commission's decision, I will benefit as a member of one exchange and lose as a member of the other. Nevertheless, I have a very strong opinion in this dispute.
I believe that the CBOE's proposed rule change is completely unjustified. It is not only without legal basis, but it is morally and ethically indefensible. By attempting to extinguish the CBOT full members' exercise rights, the CBOE is trying to enrich their members to the complete detriment of the CBOT members. By allowing the CBOT members to exercise the trading rights since the CBOE's inception, the CBOE tacitly and, in practice, recognized the validity of the exercise right. By setting up a fund to redeem the exercise right; by soliciting full CBOT members to redeem their exercise right for an amount between $60,000 and $100,000; and by, in fact, repurchasing a number of these exercise rights, the CBOE has conclusively established several points:
l. There can be no dispute that the CBOE recognizes the existence of the exercise right.
2. The CBOE has established that the exercise right has a legitimate monetary value, albeit a very inadequate one, in relation to the true value of a CBOE membership.
3. The CBOE has established precedent to compensate CBOT members for their exercise right.
THE ONLY ISSUE SHOULD BE THE VALUE OF THE EXERCISE RIGHT, NOT ITS EXISTENCE.
Likewise, the fact that the CBOT and the CME intend to merge should have no bearing on the validity of the exercise right. No current CME member who is not an independent CBOT member will have any claim to an exercise right. Only existing full CBOT members will have the exercise right. The CBOE will not suffer any adverse consequences from the proposed merger; the exercise rights issue will remain status quo. The only parties that will suffer adverse consequences will be full CBOT members if the CBOE's proposed rule change is allowed. CBOE members will be rewarded by being unjustly enriched monetarily while breaking sacred moral and ethical covenant with the CBOT members. Similarly, the CBOT members will suffer irreparable harm if the commission grants this rule change.
Please do not allow the CBOE to succeed in this despicable effort. Thank you for your consideration.
Thomas M. Harris