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By HERBERT G. McCANN
AP Business Writer
CHICAGO (AP) via NewsEdge Corporation -
Members of the Chicago Board of Trade voted
overwhelmingly Wednesday in favor of a plan to
divide the exchange into two for-profit
companies.
The results announced Wednesday evening
showed 1,115 votes in favor of the plan, and
only 103 opposed.
``That is an enormous margin, and I'm pleased
with it,'' said Mike Manning, vice president of
Rand Financial Service, Inc., who also said it
vindicated the modernization policies of CBOT
chairman David Brennan.
``What he received today was a tremendous
mandate,'' Manning said.
The plan calls for the traditional ``open outcry''
trading floors and pits to be run as a for-profit
company. The other venture would establish
electronic markets with members getting shares
in the new company.
Currently, the 152-year-old exchange is a
member-owned, nonprofit organization that has
seen its status as the world's largest commodity
exchange disappear due to competitive pressure
from electronic trading networks.
The Board of Trade, which trades futures and
options on agricultural and financial products,
lost its title as the world's No. 1 futures market
last year to the all-electronic Eurex in Frankfurt,
Germany.
Two-thirds of the more than 3,600 members had
to approve the plan to turn the exchange into a
for-profit organization.
The plan has been under fire from dissidents
concerned about the value of CBOT
memberships, known as seats, which are sold in
an auction market.
One of the exchange's 1,402 full memberships
sold for $472,000 on Wednesday, compared with
$501,000 on June 15 and $550,000 in mid-May.
The lowest price paid for a seat this year was
$460,000 on Jan. 31.
Also of concern is the right by CBOT members to
trade stock options at the Chicago Board
Options Exchange, which has argued that going
for-profit would cancel those rights.
``If we lose this right, the value of our seat will
plummet overnight,'' CBOT member Henry Shatkin
said in criticizing the proposal.
At the Board of Trade, members would get
interest in shares of the new company. Future
plans might also include a public stock offering.
The Board of Trade has been developing a more
streamlined and agile structure for months to
help cope with increasing competitive pressure
from electronic trading networks. Last June,
board members approved an alliance with Eurex.
The vote at the Board of Trade follows a
decision earlier this month by members of the
Chicago Mercantile Exchange to transform the
institution into a for-profit, shareholder-owned
corporation. The New York Mercantile Exchange
and several overseas markets have also
endorsed a for-profit move.
The Chicago Merc and the Chicago Board of
Trade, longtime leaders in futures trading, were
both surpassed in volume last year by the
all-electronic Eurex exchange. More recently,
both have been overtaken in trading volume by
the Chicago Board of Options Exchange, the
nation's leading market for stock options.
The Board of Trade and the Options Exchange
are now in merger talks.
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