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To: TFF who wrote (10977)	10/8/2003 12:59:39 PM
From: TFF	Respond to of 12617

CBOT moves to disrupt Eurex clearing deal By Jeremy Grant in Chicago Published: October 8 2003 5:00 \| Last Updated: October 8 2003 5:00 Efforts by the Chicago futures exchanges to complicate the establishment of a new US futures exchange by Eurex took a twist yesterday after the Chicago Board of Trade moved to woo shareholders in its former clearing house away from a planned new clearing arrangement with Eurex. The move, aimed at disrupting the Frankfurt-based exchange's efforts to set up a clearing house for its new exchange, comes after the CBOT and Chicago Mercantile Exchange lobbied to have US lawmakers scrutinise Eurex's futures exchange licence application. On October 23, shareholders in The Clearing Corporation will vote on a proposal to restructure the clearing house, which was formerly known as the Board of Trade Clearing Corporation and which recently acrimoniously severed links with the CBOT. The Clearing Corporation is to act as Eurex's clearer in the US. Under the proposal, Eurex is to become a minority investor in the corporation, while shareholders - known as clearing members - can sell up to 150 of their shares as part of a recapitalisation plan. It is unclear whether a majority of clearing members will vote in favour of the restructuring. The Clearing Corporation, which operates on the basis of one vote per member, has 87 shareholders but 44 are small traders on the floor of the CBOT that hold slightly less than 8 per cent of the capital. This means that if enough small clearing members vote against the proposal, The Clearing Corporation's recapitalisation plan would be abandoned, dealing a blow to Eurex's efforts to link up with the clearer - although Eurex might still try to buy the corporation. The CBOT last night approved a proposal that offers clearing members an amount of money that would compensate them for any loss in the value of their Clearing Corporation shares in the event of a "no" vote. One board member, who spoke on condition of anonymity, said that in the event of a "no" vote the CBOT would credit each member's account in a new clearing link recently set up between the CBOT and the CME. He said this would remove the "financial uncertainty" in The Clearing Corporation's proposal, which he said did not adequately address what would happen to clearing members' funds if the recapitalisation plan was voted down. "We've designed a proposal that allows our members to commence clearing at the CME immediately. What we don't want is these members to be held hostage at The Clearing Corporation by not being able to get out."