Board of Trade Clearing Corp. is feeling the heat as the common-clearing deal between Chicago’s futures exchanges gathers steam.
Under the deal, Clearing Corp. is slated to liquidate once the Chicago Board of Trade and Chicago Mercantile Exchange form a new organization.
But that new, joint clearing arm will take months to launch, which could mean a lingering death for Clearing Corp.
In a presentation to Board of Trade directors last week, Clearing Corp. Chairman Robert Felker said his organization won’t be able to support all of the exchange’s new initiatives while also diverting resources to common clearing.
Since it has to prepare for a liquidation, Felker told the board, Clearing Corp. is in no position to simultaneously shepherd such mammoth projects as the planned link with the all-electronic Frankfurt-based Eurex, according to participants at the meeting.
Already, Clearing Corp. is losing staff. Chief financial officer Judy Kula confirmed Monday she will be joining ED&F Man International in Chicago as CFO. Kula said her departure is unrelated to common clearing.
Felker’s “no-can-do” message left at least some Board of Trade directors cold. Some suspected that Clearing Corp. was putting its internal interests above those of its No. 1 customer, participants at the meeting said.
Nonsense, countered Felker. If the exchange will specify its top goals, Clearing Corp. will do as much as it can, he said. “We’re rational businessmen,” he said. “It’s a question of priorities.”
Watch for the Board of Trade to outsource at least some of its clearing business, making Andersen Consulting a primary beneficiary of common clearing.
And watch for Clearing Corp. partisans to lobby against the common-clearing pact as a membership vote looms this summer.
Even with that pressure, though, the momentum favors approval. Last week’s affirmative vote by Board of Trade directors represented a significant step toward unifying this crucial
element of the futures business– and perhaps merging the exchanges.
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Clearing systems provide the financial underpinnings of all exchange trading, by guaranteeing transactions and enforcing capital requirements.
Job related: Just as technological progress is poised to eliminate many of the “gateway” jobs at Chicago’s exchanges, Jesse Jackson’s Rainbow/PUSH Coalition is opening a La Salle Street office.
Jackson’s LaSalle Street Project, scheduled to kick off with a one-day conference on July 30, aims to promote the economic inclusion of minorities in the city’s financial community. It’s a scaled-down version of Jackson’s similar effort on Wall Street earlier this year.
To be sure, Chicago’s major exchanges count few minorities among their memberships. Of roughly 8,000 exchange members, just 0.5 percent are African-American.
On the other hand, minority representation is relatively strong among runners, clerks and trading-floor staff at the exchanges. Yet those jobs are the most likely to give way to automation. Jackson has his work cut out for him.
Break for Brokerage:: The CBOT’s Chicago Board Brokerage will be able to start an electronic-trading system for U.S. Treasuries later this month after a Delaware judge refused Cantor Fitzgerald’s request to delay the project.
But the fight’s not over. The ruling suggested that Cantor is reasonably likely to prevail on some key claims. Apparently, the CBB start-up is still at risk of an abrupt shutdown.