CBOT cuts fees for electronic trading in a salvo at Eurex US
By Mark Skertic
Tribune staff reporter
Published October 22, 2003
To compete with Eurex US, the Chicago Board of Trade has borrowed from the playbook of retailers and manufacturers: When someone wants to take your market share, try to come up with something that's better and cheaper.
On Tuesday, the Board of Trade's leadership said that fees for electronic trading are going to drop, and that the lower costs will save market users an estimated $60 million annually. The new fees are scheduled to be in place on Jan. 1.
Fees were reduced in anticipation of Eurex's arrival in the U.S. The Swiss-German exchange, the largest futures exchange in the world, has announced plans to open Eurex US by Feb. 1.
But those plans hinge on regulatory approval, and last week federal regulators said they were taking Eurex off fast-track approval so they could take a closer look at the application.
Bernard Dan, the Board of Trade's president and chief executive officer, said the Eurex application should get more scrutiny because it leaves many questions unanswered.
Eurex, he said, has made promises in its public statements, but has not addressed those points in its application with regulators.
"What you don't do is apply with one business plan and market with another," said Dan.
A spokesman for Eurex declined to comment.
The Board of Trade has been gearing up for Eurex's anticipated arrival for months. On Tuesday, Dan and Charles Carey, chairman of the board, outlined their fee plan.
"Our future rates will be at, or significantly below, all published rates of any prospective competitor," Dan said. "And there's no opaqueness about pricing. It is what it is."
Eurex CEO Rudi Ferscha has said his U.S. exchange will charge a maximum of 30 cents per contract, with most trades priced at less than 20 cents per contract. He also said the exchange would commit to holding those prices for five years.
For Board of Trade members, the average rate will be 5.5 cents per trade, down from 12 cents. Non-members using a member's account will pay on average 22.5 cents a trade, down from 27.4 cents.
Those two categories account for about 80 percent of trading, Dan said. The remainder is non-member account trading, where the average trade will cost 85 cents, down from $1.05.
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