Magazine article Modern Trader

New Fees for CBOT Traders

Magazine article Modern Trader

New Fees for CBOT Traders

Article excerpt


Business will be done differently at the CBOT now that a new fee structure has passed a membership vote. However, while enjoying considerable insider support, some argue the new fee structure is an Old World approach to an industry trying to adapt to a new world economy.

"I feel it is a fee structure that is constructed by and created for a member organization, not a [for-profit] business organization," says Neal Kottke, a clearing member of both the CBOT and CME and president of Kottke Associates LLC. "[The fee structure] may pertain to the CBOT as it is now. I don't think it will pertain to a different business model that I hope the CBOT will become in the future."

The exchange counters that it queried all of its users and looked at what many of its competitors have been doing in developing this new fee structure, which they hope will increase liquidity and lead to increased volume. CBOT representatives also point to the diverse breakdown of the fees as an example of the new structure's ingenuity. says CBOT President and CEO David Vitale.

"Historically, we have had a rather undifferentiated pricing structure that didn't always recognize the value to different users or for different kinds of products," Vitale says. "The essence of the work that we have been doing has been to identify those value levels and produce a pricing strategy that would be a bit more reflective of the complexity of who we serve and how we serve them."

The new fee structure, unanimously endorsed by the CBOT board of directors in November, was passed by the membership by a four-to-one margin on Dec. …

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