Questions from the shareholders…


In light of Bear Stearns investigation of short selling, is such an investigation required by shareholders?

CME cannot respond directly to specific questions like that, Donohue said. We would refer that to the proper authorities, but as a matter of policy, we do not comment on that.

Should the CME be buying out NYMEX members? CME membership (value) has dropped 50 percent, why is the company attempting to buy memberships for so much?
$500 million, or 612,000 per membership, not something we have done historically. “Unique and different circumstances here,” Donohue said.

Craig, could you let us know what is happening with the ERPs. Pending litigation…
Part of the merger transaction. CME is free to do whatever it chooses with those ERPs.

What are the updates from the CME Group Foundation?
We have a foundation and a trust. We’ve been giving charitable gifts to education throughout the city. We’re trying to keep it within Chicago.

FX market space has been portrayed as potentially a significant source of revenue. Yet you cannot track its volume anymore. What are volumes for this year? If these volumes are disappointing what can be done? With the Reuters partnership, what have we gotten out of this. If it is so hard to penetrate this market, how do we do it in other OTC markets?
“We have been disappointed with FX marketspace,” Donohue said. Has recently launched smart-settle, cheaper way of settling trades. Looking at attracting new participants to market. Reuters contribution has been valuable to us. These are difficult things to do because we haven’t been in this position before.

Question about the NYMEX acquisition (which has not yet been settled)
We are now in the process of dealing with the Dept. Justice, but we can’t provide any more information.

Why was Goldman Sachs picked to handle the merger with NYMEX when Goldman has said it is a direct competitor with CME?
They bring a lot of business to us. We don’t want to get bogged down with just one bank. I believe Goldman was a good add.

Vertical clearing – could you go through the process of what it would take for us to get rid of our clearing house and the merger of CFTC with SEC?
Governments are very aware of competitive landscape we operate in. Our system works very well. It will take Congressional action, but Congress only recently de-regulated the contemporary futures market. It is a low probability risk.

Can a representative of management tell us what can be done to improve value of B shares?
Bundle membership – $9.8 million bundle. Leasing – let the market decide the price. We all want to see these things appreciate. We’re competing global with clients that do not have membership. Members of our exchange still get the lowest possible rate.

Financial structure of the company – take on a “prudent” amount of debt. Future stock offerings or sovereign wealth funds to take stock?

$2.5 billion worth of debt. We’ll be generating significant cash flows to pay that down. No comment of SWF investments.

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