The Cost of Clearing

Futures & Options

Expo 2002

Thursday, November 7th

The Cost of Clearing

Moderator

• Mark D. Connelly, Senior Manager, American Express Tax and Business Services Inc.

Panelist

• Satish Nandapurkar Managing Director, Products and Services, Chicago Mercantile Exchange

• Jill Harley Vice President and Treasurer, Chicago Board of Trade

• Tom Croke Vice President of Operations, Lehman Brothers

• Rick Walsh Senior Vice President, Product Design, Rolfe & Nolan (USA) Inc.

• Bill Metzger Clearing Manager - Vice President, J. P. Morgan Futures Inc.

The Cost of Clearing

Manage and contain the cost of clearing (clearing and exchange fees) between Exchanges/FCMs/Service Providers in order to create a “win-win”environment for all

The Cost of Clearing

We would like all participants to leave today with at least one/two meaningful ideas that you could use in your quest to manage and contain the cost of clearing (exchange and clearing fees)

The Cost of Clearing

Basis for Discussion: Exchanges/FCMs/Service Providers

What two/three areas regarding fees do you feel you do well?

What two/three areas regarding fees do you feel you need to do better?

The Cost of Clearing

Historical Retrospect

• 1992 - 2001 CBOT and CME Fee Highlights

• Current CBOT and CME Fee Schedules

• Five-Year (1997 - 2001) and 2002 nine-month CBOT and CME Volume and Revenue Statistics

The Cost of Clearing

1992 - 2001 CBOT and CME Fee Highlights

• CBOT (1992)

Member $.02/side Customer $.50/side

Delegate Tiering (1992) Trade on a leased seat, you paid between $.02 - $.30/side based on how long you were a lessee.

Project A and Ceres Fees (1994) Introduction of electronic trading (Dual platforms). Same exchange fee (based on membership type) but

Ceres fee based on product type and CTI coding.

Open Outcry and ace Trading (September 2000)

Open Outcry: $.05/side for owner, $.20/side delegate (no tiering), $.50/side customer and $.75/side customer licensed product.

ace: $.25/side for owner, $.45/side for financial delegate, $.75/side for delegate, $.80/side for financial customer and

$1.25/side for customer.

The Cost of Clearing

1992 - 2001 CBOT and CME Fee Highlights• CME (1993 - July 1997)

Type Future Option

Equity $.07/side $.07/side

106D/F $.30/side $.10/side

106H/J/N $.50/side $.14/side

CBOE $.60/side $.25/side

Customer $.70/side $.35/side

GLOBEX (1996) Introduction of electronic trading (dual platforms);

System Fee (everyone paid) and Customer Fee.

Fee Changes (August 1997 to September 2000) Various changes/reductions/increases during this timeframe.

EFS System (July 2000) Online transactional viewing and adjustment facility to monitor fees.

Product Type (October 2000) Fees based on product type.

The Cost of ClearingCurrent CBOT and CME Fee Schedules

• CBOT

Open Auction

Individual Member $.05/side

Proprietary account $.06/$.05/$.04 side

Delegate $.20/side

Customer $.50/$.40/$.30 side (financials); $.60/$.50/$.40 side (agricultural)

ace

Individual Member $.15/$.13/$.10 side

Proprietary account $.35/$.30/$.25 side

Delegate $.30/$.28/$.25 side

Customer $1.25/$.95/$.75 side (financials); $1.50 (agricultural)

e-cbot $.50/$.45/$.40 side

The Cost of ClearingCurrent CBOT and CME Fee Schedules

• CME

Open Outcry

Equity and 106 I $.05 - $.15/side

106 D/F $.25 - $.38 side

106 H/J/N $.245 - $.58/side

NYMEX $.24 - $.585/side

CBOE $.32 - $.78/side

Customer $.32 - $.78/side

GLOBEX

System Fees $.25 - $.50/side

Customer Fees (NYMEX) $.085 - $.50/side

Customer (including CBOE) $.25 - $1.00/side

The Cost of ClearingCBOT Revenue and Volume Analysis (1997 - 2002)

Volume (Contracts) Revenue

Open Auction Electronic $

1997 236,769,000 5,929,000 76,793,000

1998 268,850,000 12,339,000 112,115,000

1999 243,401,000 11,160,000 102,545,000

2000 218,016,000 15,512,000 101,981,000

2001 207,774,000 52,559,000 129,030,000

2002 163,527,000 89,477,000 151,802,000 (est)

The Cost of ClearingCME Revenue and Volume Analysis (1997 - 2002)

Volume (Contracts) Revenue

Open Auction Electronic $

1997 196,346,000 4,396,000 116,917,000

1998 216,897,000 9,722,000 126,524,000

1999 184,678,000 16,059,000 140,305,000

2000 196,674,000 34,436,000 156,649,000

2001 329,782,000 81,931,000 292,459,000

2002 282,105,000 131,685,000 261,400,000

The Cost of Clearing

CBOT and CME Projected Revenue 2002

CME 340,000,000 (Est)

CBOT 200,000,000 (Est)

The Cost of Clearing

CBOT and CME Projected

Combined Revenue 2002

540,000,000

The Cost of Clearing

Question and Answer Session