Source: Chicago Mercantile Exchange Holdings
To reduce transaction costs for existing clearing members and attract new participants to its markets, Chicago Mercantile Exchange Holdings (NYSE, NASDAQ: CME) today announced it will reduce the requisite number of CME Class A Shares its clearing members must acquire and hold as part of their capital investment requirement.
Effective February 1, 2007, new firms applying for clearing member status will be required to acquire 8,000 shares of CME Class A stock, down from the previous requirement of 15,000 shares.
As a result, approximately 197,800 shares will be released each month, substantially less than the average volume of CME stock traded in a single day. In the fourth quarter of 2006, CME shares traded an average of approximately 711,544 shares per day.
For existing CME clearing firms on or before February 1, 2007, the number of Class A shares that must be assigned to the clearing member shall be decreased incrementally by approximately 2,300 shares per month over a three-month period.
"This is the third year in which we have reduced the capital investment requirement for CME clearing member firms as part of our continuing efforts to lower their transaction costs and increase their capital efficiencies," said CME Executive Chairman Terry Duffy. "Each of our current clearing firms will benefit from the release of approximately $4 million in additional equity capital over time."
"By lowering the CME Class A share requirement, we unlock significant equity value for our existing clearing member firms, and reduce costs for new members, while making our diverse products and services even more accessible to global market participants," said CME Chief Executive Officer Craig Donohue. "This initiative underscores our commitment to serving market participants around the world and building value in CME."