By Michael Hirtzer
CHICAGO, Feb 6 (Reuters) – Dozens of angry CME Group members
abruptly left a meeting with CME Group Inc on Friday,
saying executives were dismissive and largely failed to answer
questions about the exchange’s plans to close most open-outcry
futures markets.
It was the first of two members-only sessions in Chicago and
New York to address this week’s announcement by CME Group that
most open-outcry futures markets will be closed by July 2 due to
dwindling trading volumes.
No media were allowed into the session, held in a hotel
ballroom near CME’s Chicago headquarters. At least 100 members
attended and dozens talked with Reuters after leaving the
meeting.
Many said they felt slighted by the sudden decision to shut
down the iconic “pits” and the tone with which executives,
including Chairman Terry Duffy and CEO Phupinder Gill, addressed
queries about the declining value of their seats.
“They talked down to every person in that room, like
underlings. And we’re customers and members,” said one, who
asked not to be named, saying he feared reprisal.
CME declined to comment on the content of the meeting.
“We’ll continue to communicate with the entire member community
throughout the transition,” said a spokesman.
Members buy or lease “seats” at the exchange for huge sums
which give them the right to trade. The last full membership
sold for $290,000 on Thursday, down from a record of $775,000 in
1997.
Uniformed police stood outside the hotel and several
attendees told Reuters they viewed their presence as a further
attempt by the exchange to constrain the meeting. A “rules of
conduct” letter was sent to members, including warnings against
“derogatory personal references.”
Duffy told the meeting 60 CME jobs would be lost, according
to several members. Members said hundreds more jobs at trading
firms would go.
Members also asked about compensation plans, but executives
said the meeting was not to discuss buybacks of membership
seats, according to the attendees.
The value of seats should only decline by about 1 percent
when pits ultimately close because they account for less than 1
percent of exchange trading volumes, executives said, according
to attendees, who have seen seat values fall sharply this week.
One member said his seat’s value slid to $57,000 this week,
from more than $80,000 last month.
Last year, veteran traders from the grain pits dropped a
lawsuit against CME that was seen by many as a last stand from
the old-style open-outcry players to keep the floor open in the
face of competition from electronic screens.
CME Group said it would save $10 million per year after it
shuts nearly all of its futures pits in New York and Chicago.
The New York meeting is scheduled for Feb. 11.
(Editing by Lisa Shumaker)