From: Mark Feierberg
To Whom it may concern,
As a member of the Chicago Board of Trade I am infuriated with the CBOE's attempt to disenfranchise us from their proposed upcoming for profit stock offering. The CBOE was created by the CBOT and the rights to trade were given to both those who purchased CBOE memberships and those who owned CBOT memberships. The term "to trade" is what is the essence of this cooperative effort. Before the CBOT went public, a member simply had a right to trade. That right gave a member the use of the trading floor and certain other discounted savings to their trading. This is the same right the CBOT member has always had at the CBOE, and was thus created to maintain that right at the outset of the CBOE's creation. When the CBOT went public that trading right was maintained and given a value. However it was because of that trading right that a CBOT member was assigned a certain number of NYSE shares. The CBOE is saying the CBOT members trading rights do not entitle them to participate in the CBOE's demutualization. Let me maintain, it is because of a trading right that one can participate in the process when an exchange goes public. The trading right is what a member has from an exchange until it goes public and for profit. Until then a membership is merely an instrument to use the exchange for those purposes granted for trading. The trading right is and always has been the membership.
The CBOE is attempting to change their rules solely to stop the CBOTs' participation in the their IPO. The CBOT assigned a separate trading right value as part of its IPO structure. The CBOE is welcome to do the same. That trading right is what entitled the CBOT member to participate in the CBOT IPO as it should allow the CBOT member to be part of the CBOE IPO. The CBOE may put a lesser value on that trading right because of the IPO, as did the CBOT, but it can not use that to attempt to disenfranchise the CBOT member. The right remains the same, it's value changes as now the public will be owners and share exchange profits.
As a CBOT "full" member we have had to maintain all our shares, keep our CBOT trading right and keep our CBOE trading right to maintain our "full" CBOT membership status. It was only in keeping that "full" status was one entitled to trade and use ones right at the CBOE. As a member sold their shares, they no longer were considered full members, only stockholders. As a result of selling shares there was no reason to hold a CBOE trading right privilege. The right of being a full member was extinguished upon the sale of a single share of stock. Thusly, the value of the CBOE trading right would diminish as a "full" member would have no value in this right after giving up his "full" membership. Only as a "full" member could one trade at the CBOE and use their trading right. The point being, the current price of a CBOE trading right has no bearing on its real value. As CBOT full members no longer were full members they were selling their CBOE trading rights. Many of those rights were bought back by the CBOE so those rights would be retired. The CBOE understood that this right had value since the more rights it bought, the less CBOT members it would have to deal with when the time came to become a public company. As the CBOE has started these filings with the SEC to disenfranchise the CBOT, it is no longer been a market maker to buy back these rights and thus the price has dropped. Again, the point being, the current price of a CBOE trading right has no bearing on its real value.
I'd like to thank your for the time. The decision you make is an important one. I have not covered every point that I believe you should consider. I have covered those I consider to be of the greatest relevance.
Thank you again,