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Chicago Board of Trade 12/10/91 [OA 8331]
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Chicago Board of Trade 12/10/91 [OA 8331]
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Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Speech Backup Chronological Files
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Originally Processed With FOIA(s):
FOIA Number:
S
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Backup Files
Subseries:
Chron File, 1989-1993
OA/ID Number:
13786
Folder ID Number:
13786-001
Folder Title:
Chicago Board of Trade 12/10/91 [OA 8331]
Stack:
Row:
Section:
Shelf:
Position:
G
26
22
1
4
THE WHITE HOUSE
WASHINGTON
December 9, 1991
INFORMATION
MEMORANDUM FOR THE PRESIDENT
THROUGH:
DAVID DEMAREST
FROM:
TONY SNOW
JOE DUGGAN
SUBJECT:
REMARKS FOR CHICAGO TRIP
I. SUMMARY
Chicago Board of Trade: On Tuesday, December 10, at 9:25
a.m. you will deliver remarks (2 minutes, on cards) from a pulpit
of the trading floor at the cBoT to an audience of 1200 traders,
brokers and members of the cBoT. You will be introduced by
Chairman Billy O'Connor.
Chicago Mercantile Exchange: On Tuesday, December 10, at
12:00 p.m., you will deliver remarks (8 minutes, on cards) on the
upper trading floor of the Merc to an audience of 500 business
leaders from the Chicago area and members of the Merc. You will
be introduced by Chairman Jack Sandner.
Illinois Farm Bureau: On Tuesday, December 10, at 1:25 pm.,
you will deliver remarks (12 minutes, on prompter) to
approximately 500 leaders of the Illinois Farm Bureau at the
Palmer House Hotel. You will be introduced by President John
White.
II. DISCUSSION
Your remarks at the cBoT and the Merc laud the two trading
centers for their leadership in the futures market and highlights
the economic growth initiatives we sent to Congress three years
ago.
The Merc speech includes a joke about Chairman Emeritus Leo
Melamed. Melamed published a science fiction book in 1987 called
The Tenth Planet. The protagonist of the story is Commander
Kyro. Melamed is currently working on a sequel entitled Cousins.
Your remarks at the Farm Bureau emphasize economic growth
through increased trade and through domestic initiatives such as
a capital gains tax cut -- both enthusiastically supported by the
Farm Bureau.
(Snow/Nix)
BoT
Draft Three
December 9, 1991
PRESIDENTIAL REMARKS: CHICAGO BOARD OF TRADE
CHICAGO BOARD OF TRADE
TUESDAY, DECEMBER 10, 1991
[TIME] 9:25 a.m.
Billy [O'Connor], thank you for that introduction. Let me
also acknowledge Tom Donnovan, Gov. Edgar and Mayor Daley. I'll
stop there -- I'll get dizzy if I spend too much time surveying
the floor from up on this ladder.
You know, I feel right at home when I come to a trading
floor. There's just one problem. With all the commotion and
hand-waving -- I always feel an overwhelming urge to call on a
reporter. 11
I know everyone here is busy, so I'll cut to the chase. I'm
in Chicago to talk about trade and agriculture. I'm here to
listen to people who will shape our future -- people like you.
Our nation grew great on international trade, and Chicago,
the futures capital of the world, pushes America toward new
greatness in the 21st Century.
I know many people are hurting, and that the slump in some
financial industries has affected you. We will respond to hard
times with action -- action for the short-term, such as getting
our jobs-creating transportation bill up and running; action for
the long-term, building a foundation for jobs and prosperity.
I have asked Congress for three years to pass a
comprehensive series of growth initiatives, ranging from a
2
capital gains tax to banking reform; from IRA reforms to a
permanent tax credit for research and development. Well, we've
waited long enough. Next year, we will act. Count on it.
My Administration understands that human capital counts.
That's why we have proposed a revolution in American education
and an all-out assault on crime. We'll make progress in those
areas next year. Count on it.
We don't have the luxury of waiting. We must prepare for a
post-Cold War world -- a world of free and vigorous trade.
I'll meet later this week with Mexican President Carlos
Salinas. We'll talk about negotiating and signing a North
American Free Trade Agreement as soon as possible.
I'll travel later this month to Asia, and push for more open
markets, especially in Korea and Japan.
The world has changed -- and so have its challenges. But
together we can build an America that will prosper and grow.
Thanks for taking a few moments to listen. Before I climb
down to ring the bell, let me pass on the only inside trading tip
I've ever received from anybody: Buy low and sell high. 11
Good luck. Thank you. May God bless you and the United
States of America.
#
#
#
#
cBoT -- 2 minutes. POTUS speaks at 9:25 a.m. He goes up ladder
(5 rung ladder to platform at top of soybean pit) and speaks from
pulpit. After remarks Pres will go down ladder to floor and ring
bell at 9:30 a.m. to begin trading.
Roundtable (no remarks)
Merc. -- Pres will tour trading floor (no remarks). Then a
roundtable (15 business leaders). Then: Remarks in auditorium
(4-500 people). [Brief remarks -- 5 to 7 recommended]
ACKNOWLEDGEMENTS
cBoT -- Billy O'Connor (Chairman) on stage with Pres. On floor
will be Tom Donovan (Pres.) ; Gov Edgar and Mayor Daley; Secretary
Madigan. Also on floor, 2 members of Illinois Farm Bureau -- Pres.
John White and VPres Enid Schlits Schlipf
Merc -- Jack Sandner (Chairman), Bill Brodsky (Pres -- transplanted
Nwe Yorker and Wall Streeter; Leo Melamed [Ma-LAH-med]
(Chairman Emeritus) ; Rep. Cardiss Collins and Dan Rostenkowski
In audience will be Former Gov. Thompson and (no need to mention?)
Cook County State's Attorney Jack O'Malley and U. S. Attorney Fred
Foreman
Thompson - BOT (Roundtable)
Merc (in audience)
Thompson does sit on Board of
CBOT as public member.
cBoT -- 2 minutes. POTUS speaks at 9:25 a.m. He goes up ladder
(5 rung ladder to platform at top of soybean pit) and speaks from
pulpit. After remarks Pres will go down ladder to floor and ring
bell at 9:30 a.m. to begin trading.
Roundtable (no remarks)
Merc. -- Pres will tour trading floor (no remarks). Then a
roundtable (15 business leaders). Then: Remarks in auditorium
(4-500 people). [Brief remarks -- 5 to 7 recommended]
ACKNOWLEDGEMENTS
CBOT -- Billy O'Connor (Chairman) on stage with Pres. On floor
will be Tom Donovan (Pres.) ; Gov. Edgar and Mayor Daley; Secretary
Madigan. Also on floor, 2 members of Illinois Farm Bureau -- Pres.
John White and VPres Enid Schlits
Merc -- Jack Sandner (Chairman), Bill Brodsky (Pres -- transplanted
Nwe Yorker and Wall Streeter; Leo Melamed [Ma-LAH-med]
(Chairman Emeritus) ; Rep. Cardiss Collins and Dan Rostenkowski
In audience will be Former Gov. Thompson and (no need to mention?)
Cook County State's Attorney Jack O'Malley and U. S. Attorney Fred
Foreman
size of andience ?
of an lience.
500
Illini Form Burn State convention on
Farm 500
The drags need emptions internet
economic Smith Rual
1200
economic growth through
BOT
increased trade and through
Mer-500
donestic in tratues mehas a capital
Sain tax cut - - So the entheriasials
supported by the Farm Bureau.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
December 4, 1991
STATEMENT BY THE PRESS SECRETARY
President Bush has invited Anand Panyarachun, Prime Minister of
Thailand, to meet in the Oval Office and then to attend a working
lunch on December 17. They are expected to discuss regional
developments, including the implementation of a Cambodia
settlement, and issues relevant to the President's forthcoming
trip to Asia and bilateral matters. The Prime Minister will be
in the United States on a private visit.
# # #
Kettle
FACT CHECK COPY
(Snow/Nix)
BoT
Draft One
December 6, 1991
PRESIDENTIAL REMARKS: CHICAGO BOARD OF TRADE
Advance
CHICAGO BOARD OF TRADE
TUESDAY, DECEMBER 10, 1991
[TIME] 9:25
[INTRODUCTORY ACKNOWLEDGMENTS]
You know, I feel right at home here. Whenever I see this
kind of hand-waving and shouting, I feel an overwhelming urge to
Reporter
call on Helen Thomas. 11
Ress Pessanscripts
Now, Clayton Yeutter warned me not to make any sudden hand
motions here. He worries that I might buy something without
knowing it. Well, at least you don't sell broccoli futures.
Per Futures list
I know everyone here is busy, so I'll cut to the chase. I'm
in Chicago today to talk about trade, agriculture and the future.
I'm here to listen to people who will shape our future -- people
like you.
Our nation grew great on international trade, and Chicago,
the futures capital of the world, pushes this nation toward new
greatness in the 21st Century. You don't doubt America's ability
to compete in the future -- you count on it.
I know many people are hurting, and that the slump in some
financial instruments has affected your business. We will
respond to hard times by trying to lay the foundation for growth
-- jobs -- in the future.
I have asked Congress for three years to pass a
comprehensive series of growth initiatives, ranging from a
2
capital gains tax -- which would free up the capital we need to
build a better future -- to banking reform; from IRA reforms to a
permanent tax credit for research and development. Well, we've
waited long enough. Next year, we will act. Count on it.
My Administration also understands that human capital
counts. That's why we have proposed a revolution in American
education. That's why we have pushed to slash the hidden tax
Crime
D Leays DPC LegAttairs
Legs
that crime imposes on working people and businesses. I first
proposed a comprehensive crime package nearly three years ago --
and we have nothing. Again, we'll get action next year, even
though it's an election year. Count on it.
Americans have had it with finger-pointing in Washington.
They want action. They'll get it. I have been calling on
Congress to lay down its partisan swords when it returns and to
join in common cause to loosen government's grip on people like
you -- workers, entrepreneurs, investers; dreamers and doers.
We don't have the luxury of waiting. We have the urgency of
preparing ourselves for a post-Cold War world -- a world of free
and vigorous trade.
I'll meet later this week with Mexican President Carlos
Thinkend
12/14
Salinas. I'm sure we'll talk about negotiating and signing a
North American Free Trade Agreement as soon as possible.
Saledule
I'll travel later this month to Asia, and push for more open
markets, especially in Korea and Japan. And I'll work as hard as
I can to see that we reach a satisfactory agreement on a new
trade agreement at the Uruguay Round of the GATT talks.
spok
3
The world has changed -- and so have the demands on our
economy. You make the future happen, and you understand its
challenges. Together, we can build an America that will prosper
and grow.
Thanks for taking a few moments to listen. Now, I'll pass
on the only inside trading tip I've ever received from anybody:
Buy low and sell high. 11
Good luck. Thank you. May God bless you and the United
States of America.
#
#
#
#
Per conversation with Dave Prosperi --
Pres will speak on the trading floor. It will not shut down. It's
very hard to shut down the floor. They only do so on Martin Luther
King's birthday -- a 1-minute moment of silence.
CEO William O'Connor will intro Pres. Pres can call him "Billy."
He's a very gregarious, very Irish fellow. Pres Tom Donovan will
also be on stage with Pres. Rep. Rostenkowski is a buddy of
Donovan and many of the members at cBoT.
Prosperi noted the most important points to make:
Importance of free markets; international competition and
relief from international trade barriers
Acknowledge that Chicago is the futures market capitol of the
world
Acknowledge that the cBoT provides price discovery [price
determination] for agricultural markets
Pres will make brief remarks [2-3 minutes] on floor and then he
will go up to a roundtable meeting [remarks -- no word yet from
Advance; Prosperi thinks 1-minute would be more than enough].
Attending: some White Housians, two Farm Bureau reps, and members
of cBoT -- including O'Connor and Donovan (total of 25 people).
The mood at cBoT: they are hurting because of the economy --
especially in the trading of T-bonds, since there is not as much
risk to hedge. Seat prices have shrunk: used to be around
$375,000-400,000. In the past few months, it's been around
$300,000. They've had a record of $550,000 twice -- once in Aug
87 and once in Aug of 88. Seats currently go for $300,000 (as of
today).
cBoT used to deal primarily in agricultural futures, now both
financial and agricultural. In 1982: 75% agricultural, 25%
financial. Now, 75% financial, 255 agricultural.
The major members are mostly in agriculture, not financial.
12/06/1991 14:55 FROM
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P.02/14
ADDRESS TO THE
FUTURES INDUSTRY ASSOCIATION
CHICAGO DIVISION
UNION LEAGUE CLUB
CHICAGO, ILLINOIS
APRIL 24, 1991
WILLIAM F. O'CONNOR
CHAIRMAN
CHICAGO BOARD OF TRADE
12/06/1991 14:56 FROM
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GOOD AFTERNOON. WHILE I ALWAYS ENJOY THE OPPORTUNITY TO
SPEAK TO GROUPS IN OTHER PARTS OF THE COUNTRY AND
DIFFERENT CORNERS OF THE WORLD, IT'S ESPECIALLY GRATIFYING
TO BE HERE TODAY TO ADDRESS CHICAGOANS. FOR AS
CHICAGOANS YOU HAVE A UNIQUE AWARENESS OF THE CHICAGO
BOARD OF TRADE AND THE IMPORTANCE OF THE EXCHANGE TO THE
WORLD TRADING COMMUNITY.
THE POSITION THAT THE BOARD OF TRADE HOLDS IS A VERY
IMPORTANT ONE. FOR 143 YEARS, WE HAVE BEEN THE WORLD
LEADER... IN VOLUME, IN PRODUCT INNOVATION, IN CHARTING THE
COURSE FOR WORLD TRADE. LAST YEAR WE AGAIN LED ALL
EXCHANGES, TRADING 154 MILLION CONTRACTS - -- BREAKING OUR
OWN RECORD OF 143 MILLION. THIS YEAR WE ARE EXPLORING SOME
EXCITING NEW PRODUCTS - WHICH I WILL DETAIL FOR YOU IN
JUST A BIT. AND LAST WEEK, WE SAW THE SENATE APPROVAL OF
THE CFTC REAUTHORIZATION BILL... A COMPROMISE BILL FOR
WHICH WE FOUGHT VERY HARD, WORKING CLOSELY WITH CONGRESS
TO ENSURE THAT ANY LEGISLATION ENACTED WILL BE FOR THE
BEST OF ALL U.S. FUTURES MARKETS.
THAT BILL REFLECTS A MAJOR CONFIRMATION OF THE PRINCIPLES
OF GREATEST IMPORTANCE IN OUR MARKETS: SELF-
DETERMINATION ON MARGINS; COMPARABLE REGULATORY
TREATMENT FOR SIMILAR RISK-SHIFTING INSTRUMENTS; ACCESS
TO NEW PRODUCTS FOR BOARD OF TRADE MEMBERS; AND THE OPEN
OUTCRY AUCTION MARKET.
THE SENATE'S APPROVAL, WHILE BUT A STEP IN A LONG PROCESS,
IS NONETHELESS A VERY CRITICAL STEP. FOR PASSAGE OF THIS
BILL WILL ALLOW US TO PUT SOME OLD BUSINESS BEHIND US AND
LET US GET ON WITH THE NEW.
FOR THREE AND ONE-HALF YEARS, THE BOARD OF TRADE HAS BEEN
DEALING WITH THE SPECTER OF THE 1987 STOCK MARKET CRASH.
IT HAS DOGGED THE STEPS OF OUR FORWARD PROGRESS AS MUCH
AS IT HAS CAST A SHADOW OVER THE REAUTHORIZATION OF THE
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2
COMMODITY FUTURES TRADING COMMISSION. THE BOARD OF
TRADE'S RESPONSE TO THE CRASH WAS SWIFT AND STRONG.
HOWEVER, THE RESULTANT EDUCATIONAL EFFORT WE UNDERTOOK
TO EDUCATE LEGISLATORS ABOUT OUR MARKETS WAS INVOLVED
AND PROTRACTED.
EACH TIME IT SEEMED LIKE OUR EFFORTS WERE FRUITFUL, OUR
MARKETS CAME UNDER SCRUTINY AGAIN. THE SUMMER AFTER THE
CRASH WE EXPERIENCED THE DROUGHT OF 1988. WHICH FOCUSED
GREAT ATTENTION ON OUR AG MARKETS. IN OCTOBER 1989,
ANOTHER STOCK MARKET CRASH. AND, AGAIN, WALL STREET
POINTED THE FINGER AT CHICAGO. AT THE FUTURES MARKETS
AT THE VERY MARKETS WHICH HELPED STABILIZE THE UNDERLYING
CASH MARKETS.. THE MARKETS WHICH HELP MANAGE CASH
MARKET RISK.
WITH EACH OF THESE EVENTS, WE TOOK HEAT. AND WITH EACH OF
THESE EVENTS, WE STOOD UP AND TOLD THE WORLD OUR STORY.
BECAUSE WE HAD A GOOD STORY TO TELL. OUR MARKETS
PERFORMED . OUR MARKETS WORKED. OUR MARKETS ARE THE BEST
MARKETS IN THE WORLD.
SINCE THE 1987 CRASH, WE'VE GONE TO WASHINGTON, D.C.
NEARLY 100 TIMES. TO TELL OUR STORY TO CONGRESS. TO
TESTIFY BEFORE CONGRESS. so CONGRESS WOULD PASS
LEGISLATION TO HELP US BETTER OUR MARKETS. LEGISLATION TO
REAUTHORIZE OUR REGULATOR, THE CFTC. LEGISLATION THAT
WILL ALLOW US TO COMPETE FAIRLY AND ON A LEVEL PLAYING
FIELD - BOTH IN THE U.S. AND IN THE GROWING GLOBAL ARENA.
WE HAVE WORKED WITH OUR LEGISLATORS TOWARD PASSAGE OF A
FAIR BILL AND HAVE SPOKEN UP TO DEFEND OUR MARKETS.
BECAUSE AT THE CHICAGO BOARD OF TRADE, WE ARE NOT AFRAID
TO TAKE A STAND. NO MATTER WHAT THE ISSUE MAY BE. IN
RECENT YEARS, WE MAY HAVE TAKEN OUR LUMPS, BUT WE HAVE
ALWAYS STOOD BY WHAT WE BELIEVE TO BE RIGHT.
12/06/1991 14:57 FROM
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3
FOR THE PAST TWO YEARS, THE FOCUS OF PUBLIC ATTENTION WAS
THE FEDERAL INVESTIGATION OF OUR PITS AND RESULTING
TRIALS. IN THE MIDDLE OF THAT WE HAD THE EMERGENCY ACTION
IN OUR EXPIRING SOYBEAN FUTURES. ALL THIS IN ADDITION TO
THE FALLOUT FROM TWO STOCK MARKET CRASHES. BUT, TO
PARAPHRASE VOLTAIRE, INDIVIDUAL MISFORTUNES CONTRIBUTE
TO THE GENERAL GOOD. I THINK THE BOARD OF TRADE AND THE
Michael
FUTURES INDUSTRY MAY WELL PROVE THE TRUTH OF THIS. IN
Baskin
FACT, IN A RECENT SPEECH AT THE BOARD OF TRADE, MICHAEL
BOSKIN -- CHAIRMAN OF THE WHITE HOUSE COUNCIL OF ECONOMIC
Spoke
ADVISERS -- PRAISED FUTURES MARKETS IN THE U.S. AS A GREAT
NATIONAL ASSET. HE WENT ON TO SAY THAT THEY PROVIDE THE
Ci30T
ECONOMY WITH A GREAT DEAL OF FLEXIBILITY TO ABSORB
VARIOUS TYPES OF SHOCKS MORE EFFECTIVELY AND WITH LESS
DISRUPTION. CERTAINLY THE ECONOMY AT LARGE IS BETTER OFF
FOR THE WIDE RANGE OF FINANCIAL FUTURES INSTRUMENTS WE
OFFER. AND THE INDUSTRY WILL BE THE BETTER FOR OUR
TRIBULATIONS.
WE TAKE OUR POSITION AS WORLD LEADER VERY SERIOUSLY. THAT
IS WHY WE so CLOSELY GUARD WHAT WE HAVE... LEST IT BE TAKEN
AWAY BY WELL-MEANING BUT ONEROUS LEGISLATION. WE FACE
ENOUGH OF A COMPETITIVE THREAT AS IT IS FROM THE GROWING
FOREIGN FUTURES MARKET. JUST IN THE LAST FIVE YEARS THE
BOARD OF TRADE HAS SEEN ITS WORLD MARKET SHARE SLIP FROM
39 TO 27.5 PERCENT. AN 11 AND ONE-HALF PERCENT LOSS...
DESPITE BEING THE WORLD'S LEADING EXCHANGE.. DESPITE
INTRODUCING AN IMPRESSIVE ARRAY OF NEW TRADING VEHICLES
DESPITE AN 84 PERCENT INCREASE IN VOLUME THROUGHOUT THE
SAME FIVE-YEAR PERIOD.
so HOW DOES AN EXCHANGE DEFEND ITS POSITION? HOW DOES THE
BOARD OF TRADE MAINTAIN ITS LEADING EDGE? THROUGH
INNOVATION AND BY ALWAYS RESPONDING TO THE NEEDS OF THE
MARKETPLACE.
SOME CRITICS SAY THAT NEW CONTRACTS DON'T WORK. THAT THE
SUCCESS YOU CAN HOPE FOR IS MARGINAL AT BEST. THEY
12/06/1991 14:57 FROM
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4
OBVIOUSLY WEREN'T LOOKING AT THE CHICAGO BOARD OF TRADE.
BETWEEN 1985 AND 1990, THE BOARD OF TRADE INTRODUCED 27
NEW FUTURES AND OPTIONS CONTRACTS. THIRTEEN, OR NEARLY
HALF, OF THOSE CONTRACTS HAVE SUCCEEDED, WHICH CERTAINLY
BEATS THE U.S. FUTURES INDUSTRY SUCCESS RATE OF 41
PERCENT. NOT EVERY ONE OF THOSE IS A T-BOND CONTRACT,
WITH AN OPEN INTEREST OF 250,000. BUT EACH OF THESE
SUCCESSES HAS AN OPEN INTEREST OF AT LEAST 5,000
CONTRACTS.
OTHER CRITICS SAY THAT THERE SIMPLY ARE NO NEW PRODUCTS...
THAT THE FUTURES INDUSTRY REACHED THE PINNACLE OF
INNOVATION IN THE '70s AND '80s WITH ITS DEVELOPMENT,
REFINEMENT AND SUCCESSFUL IMPLEMENTATION OF ENERGY
FUTURES, OF FINANCIAL FUTURES, OF OPTIONS ON FUTURES.
IS EVERYTHING ELSE, THEN, A COPY OR REWORKING OF AN OLD
FORMULA? I DON'T THINK SO. LOOKING AHEAD IN 1991, I SEE
THE BOARD OF TRADE LEADING THE INDUSTRY IN CHARTING A
NUMBER OF NEW, EXCITING COURSES. TWO MONTHS FROM NOW, THE
BOARD OF TRADE WILL BEGIN TRADING FUTURES ON THREE-YEAR
AND FIVE-YEAR SWAPS. AND OPTIONS ON THOSE FUTURES. THE
SWAPS MARKET IS A $1 TRILLION SEA OF OPPORTUNITY. BACK IN
1980 IT WAS JUST A PUDDLE. HOWEVER, OVER THE LAST 11
YEARS, THE MARKET HAS GROWN... AND, ONCE AGAIN, THE BOARD
OF TRADE IS RESPONDING TO THE NEEDS OF THE CHANGING
MARKET. BY INTRODUCING AN EXCHANGE-TRADED TOOL TO
MANAGE THE ENORMOUS RISK THAT SWAPS PLAYERS FACE IN THE
OFF-EXCHANGE MARKET.
THAT'S NOT ALL THE BOARD OF TRADE HAS PLANNED FOR 1991.
OCTOBER WILL SEE THE LAUNCH OF THE MOST INNOVATIVE NEW
PRODUCT AREA SINCE WE DEVELOPED INTEREST-RATE FUTURES.
I'M SPEAKING, OF COURSE, ABOUT INSURANCE FUTURES AND
OPTIONS. ON OCTOBER 1 WE PLAN TO BEGIN TRADING A FUTURES
AND AN OPTIONS CONTRACT ON HEALTH INSURANCE. LIKE SWAPS
PLAYERS, THE MEDICAL CARE INDUSTRY CRIES OUT FOR A
WORKABLE, EXCHANGE-TRADED TOOL WITH WHICH TO MANAGE
12/06/1991 14:58 FROM
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5
RISK. I AM CONFIDENT THAT HEALTH INSURANCE FUTURES WILL
HELP THAT INDUSTRY HEDGE THE $200 BILLION FINANCIAL RISK IT
CARRIES.
HEALTH INSURANCE WILL BE THE FIRST PRODUCT OF WHAT WILL
ACTUALLY BECOME AN ENTIRE NEW RISK-MANAGEMENT COMPLEX.
AUTOMOBILE, HOMEOWNERS AND MARINE INSURANCE CONTRACTS
ARE ALL BEING DEVELOPED BY THE BOARD OF TRADE.
year
AND, I KNOW THAT MANY OF YOU ARE AWARE THAT THE EXCHANGE
IS JUST BEGINNING TO EXPLORE THE POSSIBILITY OF A FUTURES
related
CONTRACT BASED ON THE TRADABLE EMISSION RIGHTS BEING
DEVELOPED AS PART OF THE CLEAN AIR ACT OF 1990.
WHILE THE BOARD OF TRADE HAS BECOME RENOWN AS THE
WORLD'S MOST INNOVATIVE FINANCIAL EXCHANGE, OUR ROOTS
REMAIN IN THE AGRICULTURAL MARKETS. TO COMPLEMENT OUR
AG MARKETS, WE WILL INTRODUCE THIS YEAR THE WORLD'S FIRST
FUTURES CONTRACT ON FERTILIZER. THE U.S. IS THE WORLD'S
Joke?
LARGEST PRODUCER OF DIAMMONIUM PHOSPHATE. NINETY PERCENT
OF THE CORN PLANTED IN THIS COUNTRY RECEIVES PHOSPHATE
NUTRIENTS. WITH AGRICULTURAL PRICE EXPOSURE AND COST
ESCALATION BEING WHAT IT IS, I THINK THE TIME HAS COME FOR
FERTILIZER FUTURES. A CONTRACT ON ANHYDROUS AMMONIA -
ANOTHER FERTILIZER COMPONENT - IS ALSO UNDER
DEVELOPMENT.
THE DEVELOPMENT OF THESE NEW FERTILIZER FUTURES
UNDERSCORES THE BOARD OF TRADE'S DEEP COMMITMENT TO THE
AGRICULTURAL MARKETS. APACE WITH THAT COMMITMENT IS THE
SENSE OF OBLIGATION I FEEL TO ENSURE THAT BOARD OF TRADE
AG MARKETS TRULY REFLECT THE UNDERLYING CASH GRAIN
MARKETS.
TWO WEEKS AGO, I SPOKE TO THE MINNEAPOLIS GRAIN SHIPPERS
ASSOCIATION. I BROACHED A SENSITIVE SUBJECT WITH THEM. I
ADVOCATED CHANGING THE DELIVERY REQUIREMENTS FOR THE
12/06/1991 14:58 FROM
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6
BOARD OF TRADE'S WHEAT, CORN AND SOYBEAN FUTURES TO
STIPULATE CERTIFIED U.S. GRAIN ONLY.
ALTHOUGH ONLY ONE QUESTION WAS RAISED AT THAT MEETING,
QUESTIONS AND DEBATE THE NEXT DAY GREW TO A LEVEL THAT
CONFIRMED THE GREAT IMPORTANCE OF THIS MATTER. BUT NO
PARTY HAS MORE AT STAKE THAN THE BOARD OF TRADE - - THE
VERY INTEGRITY OF OUR WHEAT, CORN AND SOYBEAN CONTRACTS.
INFORMAL DISCUSSION OF THIS ISSUE IN THE CASH GRAIN AND
FUTURES INDUSTRIES DATES TO THE SUMMER OF 1990.
DISCUSSION AND DELIBERATION BY OUR AGRICULTURAL EXECUTIVE
COMMITTEE BEGAN IN OCTOBER. THIS TIME FRAME CORRESPONDS
TO THE FORMULATION AND PASSAGE BY CONGRESS OF THE 1990
FARM BILL.
THE LAW HAS LONG PROHIBITED THE SHIPMENT OF FOREIGN-GROWN
GRAIN UNDER GOVERNMENT-SUBSIDIZED OR FINANCED EXPORT
SALES. THE 1990 FARM BILL, HOWEVER, REQUIRES THE
DEPARTMENT OF AGRICULTURE TO ENFORCE THESE PROVISIONS
STRINGENTLY. EXPORTERS SHIPPING NON-U.S. GRAIN FACE STIFF
NEW CRIMINAL PENALTIES. THEY AND THEIR SUPPLIERS MUST BE
ABLE TO DOCUMENT THAT ANY GRAIN THAT WILL BE - OR EVEN
MAY BE - SHIPPED UNDER GOVERNMENT SUBSIDIES OR LOANS IS
U.S.-GROWN.
STANDING IN DIRECT CONTRADICTION TO THE FARM BILL IS THE
FREE TRADE AGREEMENT WITH CANADA, WHICH HAS BEEN IN
EFFECT SINCE JANUARY 1, 1989. THE FREE TRADE AGREEMENT, AS
WELL AS OTHER BILATERAL AGREEMENTS AND ARRANGEMENTS,
OPENS THE U.S. BORDER TO INFLOWS OF FOREIGN-GROWN GRAIN.
IT REPRESENTS A DESIRABLE GROWTH OF CROSS-BORDER GRAIN
TRADE AND PROMISES MUTUAL EXPANSION OF MARKETS FOR U.S.
AND CANADIAN FARMERS. THE CBOT AND I PERSONALLY HAVE
ALWAYS SUPPORTED AND PROMOTED FREE TRADE. BUT, LAUDABLE
AS THE FREE TRADE AGREEMENT MAY BE, THE RESULTING GROWTH
OF CANADIAN STOCKS IN CIRCULATION IN THE U.S. GRAIN TRADE
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PLACES EXPORTING COMPANIES IN CONSIDERABLE DANGER OF
VIOLATING THE LAW.
CONSIDERING THE SEVERE CONSEQUENCES, THESE COMPANIES
FOUND IT NECESSARY TO REQUIRE THEIR SUPPLIERS TO
CONTRACTUALLY GUARANTEE THAT GRAIN SHIPPED TO THEM BE OF
U.S. ORIGIN. MANY MILLERS AND PROCESSORS WHOSE PRODUCTS
MIGHT EVENTUALLY FIND THEIR WAY TO AN EXPORT POINT, HAVE
ADOPTED THE SAME STANDARD FOR THEIR OWN PROTECTION. WITH
THE WORDS "U.S. GRAIN ONLY" CONTAINED IN NEARLY EVERY
CONTRACT, A U.S. ORIGIN GUARANTEE HAS BECOME, IN FACT, THE
TRADING STANDARD IN THE MAJOR CASH MARKETS IN CORN,
SOYBEANS AND WHEAT.
THE ROLE OF FEDERAL SUBSIDIES AND CREDIT PROGRAMS HAS
GROWN so THAT, FAILING A SUCCESSFUL CONCLUSION OF GATT
NEGOTIATIONS TO REDUCE THE USE OF SUCH MEASURES IN
INTERNATIONAL TRADE, AN INCREASING PERCENTAGE OF TOTAL
EXPORTS OF CORN AND SOYBEANS WILL BE COVERED BY THE U.S.
ORIGIN CLAUSE.
THE TRANSPORTATION NETWORK IN THE INTERIOR OF THE U.S.,
WHICH ACCESSES THE DELIVERY MARKETS IN CHICAGO AND TOLEDO
IS ORIENTED TO EXPORT MARKETS. AS A RESULT OF THE RATE
STRUCTURES AND VOLUME EFFICIENCIES INHERENT IN THIS
NETWORK, MOST GRAIN SHIPMENTS THAT LEAVE CHICAGO OR
TOLEDO ARE BOUND FOR EXPORT LOCATIONS, AND THEREFORE ARE
ON THE SAME CONTRACTUAL TERMS AS OTHER EXPORT SHIPMENTS.
EVEN DOMESTIC-BOUND SHIPMENTS IN TRAINS OFTEN TRADE WITH
THE U.S. ORIGIN REQUIREMENT.
AS A CONSEQUENCE OF THESE CONDITIONS, THE U.S.-ORIGIN ISSUE
IMPACTS DIRECTLY ON THE PERFORMANCE OF THE CBOT'S CORN,
WHEAT AND SOYBEAN CONTRACTS. WHEN THE DELIVERY MARKET
WAREHOUSEMAN MAKES DELIVERY AGAINST A SALE OF FUTURES
CONTRACTS, THE QUALITIES AND SPECIFICATIONS OF THAT GRAIN
SHOULD PARALLEL THOSE OF THE OUTLYING CASH MARKETS. TO
ALLOW THE WAREHOUSEMAN TO DELIVER A COMMODITY FOR WHICH
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THE TAKER HAS A LIMITED MARKET, OR NO MARKET (OTHER THAN
RE-DELIVERY TO THE TENDERING WAREHOUSE), WOULD UPSET THE
BALANCE NECESSARY FOR BOTH LONG HEDGERS AND SHORT
HEDGERS TO CONTINUE TO USE THE MARKET. THIS CONCERN IS NOT
JUST A MATTER OF HYPOTHETICAL CONJECTURE. THERE HAVE
BEEN INSTANCES OF CBOT DELIVERY GRAIN BEING REFUSED AT THE
GULF.
THESE CONDITIONS ARE ATTRIBUTABLE TO ACTS OF CONGRESS
WHICH SIMULTANEOUSLY MADE FOREIGN GRAIN IN EXPORT
CHANNELS LESS MERCHANDISABLE AND RESULTED IN THE
LIKELIHOOD OF GREATER QUANTITIES OF FOREIGN GRAIN BEING
PRESENT IN AVAILABLE SUPPLIES. TO MAINTAIN THE EFFICIENCY
OF THE GRAINS TRANSPORT AND TRADING CHANNELS IN THE U.S.,
THE STANDARDS WHICH EXPORTERS MUST MEET ARE NOW THE
STANDARDS FOR ALL.
IN HOPES OF MAINTAINING THE STATUS QUO IN cBoT CONTRACT
DELIVERY REQUIREMENTS, WE SOUGHT FLEXIBILITY FROM THE CASH
GRAIN INDUSTRY IN THE WRITING OF CASH GRAIN CONTRACTS.
WE TURNED TO THE U.S. DEPARTMENT OF AGRICULTURE,
REQUESTING REGULATION CHANGES OR REINTERPRETATIONS TO
HELP RESOLVE THE SITUATION. THEY TOLD US THAT THE PROPER
SOURCE OF RELIEF WAS CONGRESS. CONGRESSIONAL STAFFERS, IN
TURN, CLAIMED THEY COULD SEE NO POLITICALLY PALATABLE
SOLUTION.
WE THEN SOUGHT SOLUTIONS ON THE MIDDLE GROUND. IT WAS
SUGGESTED THAT DELIVERY GRAIN'S ORIGIN BE IDENTIFIED ON
RECEIPT. THE BUYER'S CHANCE OF RECEIVING FOREIGN GRAIN
WOULD BE IN DIRECT PROPORTION TO THE PERCENTAGE OF FOREIGN
GRAIN IN DELIVERY WAREHOUSES. THE WEAKNESS OF THIS
PROPOSAL IS THAT EVENTUALLY, ONLY FOREIGN GRAIN WOULD
REMAIN IN DELIVERY WAREHOUSES. ANOTHER COMPROMISE WHICH
HELD MORE PROMISE WAS TO PROVIDE U.S. GRAIN FOR DELIVERY
UPON REQUEST BY THE BUYER. TO PREVENT THE POSSIBILITY OF A
SQUEEZE OR CORNER RELATED TO THE DELIVERY GRAIN'S ORIGIN,
THE EXCHANGE WOULD REQUIRE PROOF OF A BONA FIDE NEED FOR
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U.S.-GRAIN-ONLY DELIVERY UNAVAILABLE FROM OTHER SOURCES
AT THE SAME OR LOWER PRICE.
THE EXCHANGE'S TRADITIONAL ADHERENCE IN ITS CONTRACTS TO
THE STANDARD PRACTICES OF THE CASH GRAIN TRADE IS THE
FOUNDATION OF THEIR INTEGRITY. THE INTEGRITY OF THE
DELIVERY PROCESS, IN TURN, IS THE GLUE WHICH HOLDS THE
FUTURES MARKETS TOGETHER. BOTH SIDES OF THE HEDGING
PROCESS DESERVE EQUAL CONSIDERATION AND PROTECTION.
GIVEN OUR RESPONSIBILITIES TO THE GRAIN TRADE AND TO THE
INTEGRITY OF OUR MARKETS, IT BECAME APPARENT THAT WE
COULD NO LONGER AWAIT ACTION BY OTHERS IN RESOLVING THIS
PROBLEM. CONCERNED WITH MAINTAINING THE VIABILITY OF THE
CONTRACTS, I VOICED SUPPORT FOR THE IDEA THAT ALL GRAIN
DELIVERED ON OUR CONTRACTS BE U.S.-GROWN.
THROUGHOUT THE CBOT'S HISTORY, THE EXCHANGE HAS LED THE
WAY IN IDENTIFYING AND RESOLVING SUCH ISSUES. BY PLACING
THE MATTER BEFORE OUR BOARD OF DIRECTORS, WE HAVE ALSO
PLACED IT BEFORE THE COURT OF PUBLIC AND INDUSTRY OPINION.
IT HAS BEEN A PRIMARY TOPIC FROM THE LARGEST EXPORT GRAIN
COMPANIES TO THE CANADIAN MINISTRY OF AGRICULTURE TO THE
USDA AND CONGRESS. WE ARE WORKING NOW WITH ALL
INTERESTED PARTIES TO ACHIEVE A SOLUTION WHICH I BELIEVE
WILL PRESERVE THE SPIRIT OF FREE TRADE AND PROTECT THE
VALUE OF THE LONG HEDGE IN OUR MARKETS.
AS WE SEEK TO FIND EQUITABLE SOLUTIONS TO PROBLEMS SUCH
AS THESE, WE ARE NOT LOSING SIGHT OF WHAT IS GOING ON ALL
AROUND US. THE WORLD IS CHANGING AND THE NEEDS OF
MARKET PARTICIPANTS ARE CHANGING. AND, AS THOSE NEEDS
CHANGE, so MUST WE, THE EXCHANGES. THAT IS WHY WE ARE
CONSTANTLY LOOKING INTO NEW PRODUCT LINES. AND THAT IS
WHY WE ARE CONSTANTLY SEARCHING FOR BETTER WAYS TO RUN
OUR BUSINESS. FOR WE HAVE A LOT TO LOSE IF WE DO NOT
REMAIN COMPETITIVE.
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f
ONE OF OUR NEW APPROACHES IS TO WORK MORE CLOSELY WITH
THE EXCHANGE THAT HAS ALWAYS BEEN TABBED OUR FIERCEST
COMPETITOR, THE CHICAGO MERCANTILE EXCHANGE. WE ARE
LOOKING INTO COMBINING CERTAIN BOARD OF TRADE AND CME
FUNCTIONS. FUNCTIONS SUCH AS OPERATIONS, FOREIGN
MARKETING AND CLEARING.
REGARDING CLEARING, THE BOARD OF TRADE AND THE CME
CURRENTLY EACH HAVE THEIR OWN CLEARING OPERATIONS. AS
SUCH, MANY OF OUR MEMBER FIRMS MUST MAINTAIN CLEARING
STAFFS AT EACH EXCHANGE. IN THESE DAYS OF RISING COSTS
AND INCREASING COMPETITION, I LOOK AT THIS AND KNOW THAT
THERE HAS TO BE A BETTER WAY... A MORE EFFICIENT WAY.
IT'S SENSELESS FOR FCMs THAT BELONG TO BOTH EXCHANGES TO
HAVE TO TAKE A DOUBLE HIT ON CLEARING. NOT WHEN THERE IS A
BETTER WAY. AND THERE IS A BETTER WAY. A WAY BY WHICH WE
WILL BOTH SAVE MONEY AND IMPROVE OUR COMPETITIVE EDGE.
OBVIOUSLY, WE WANT TO SAVE MONEY.. AND WE WILL. MEMBER
FIRMS WILL BE ABLE TO REDUCE THE STAFF AND FACILITIES
NEEDED TO SUPPORT TWO SEPARATE CLEARING OPERATIONS
AND, ON A GRANDER SCALE, so WILL EACH EXCHANGE.. WHICH
AGAIN WILL RESULT IN SAVINGS PASSED ON TO MEMBER FIRMS.
AS THEY'VE FOUND OUT IN THE AUTOMOBILE INDUSTRY, IF YOU
BURN CLEANER FUEL, YOU'RE BOUND TO GET BETTER MILEAGE.
THE "MILEAGE" WE GAIN THROUGH UNIFIED CLEARING WON'T ONLY
BE MEASURED IN TERMS OF DOLLARS, HOWEVER. UNIFIED
CLEARING WILL HELP US MAINTAIN OUR COMPETITIVE EDGE.
UNIFIED CLEARING WILL HELP KEEP CHICAGO POSITIONED AS THE
WORLD CENTER FOR FUTURES TRADING. BOTH DOMESTICALLY AND
INTERNATIONALLY. IN THESE DAYS OF DECLINING MARKET SHARE,
WE CANNOT AFFORD NOT TO TAKE A SERIOUS LOOK AT ANYTHING
THAT WILL HELP KEEP US A STEP AHEAD OF THE PACK.
BUT UNIFIED CLEARING IS NOT JUST SOMETHING WE ARE LOOKING
AT... IT IS SOMETHING WE ARE MOVING ON. FOR UNIFIED CLEARING
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IS WHERE WE SHOULD BE AT. JUST AS WITH OUR GLOBEX JOINT
VENTURE, WE WILL BE 50-50 PARTNERS WITH THE CME WHEN IT
COMES TO UNIFIED CLEARING. FIFTY PERCENT EACH. WITH 100
PERCENT BENEFIT FOR OUR MEMBERSHIPS.
AS THE MARKETS CONTINUE TO EXPAND ON A GLOBAL SCALE, WE
WILL CONTINUE TO INVESTIGATE NEW WAYS TO INNOVATE. NEW
WAYS TO UNIFY... NEW WAYS TO REMAIN ON TOP. AND IF WE ARE
SUCCESSFUL, WE WILL CREATE A BETTER MARKETPLACE FOR OUR
MEMBERS. A BETTER COMPETITIVE POSITION FOR OUR EXCHANGE
AND, MOST IMPORTANTLY, WE WILL CREATE MORE EFFICIENT, MORE
EFFECTIVE, AND MORE LIQUID MARKETS FOR INVESTORS THE
WORLD OVER.
THANK YOU.
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TRANSMISSION 1 OF 2
News
FROM THE
Chicago Board of Trade
chelipy
COMMUNICATIONS DEPARTMENT
OUR FAX NO: (312) 341-3306
PLEASE DELIVER IMMEDIATELY
DATE:
December 6, 1991
TIME:
To:
Michelle Nix
FROM:
David P. Prosperi
PAGES:
12 (INCLUDING COVER PAGE)
CONTACT
Florence
AT (312) 435- 3629
REGARDING ANY DIFFICULTY WITH THIS TRANSMISSION.
COMMENTS:
12/06/1991 14:37 FROM
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News
FOR IMMEDIATE RELEASE
December 2, 1991
Laura T. LaBarbera
(312) 435-3649
from the
Chicago Board of Trade
CBOT NOVEMBER VOLUME TOPS 12.2 MILLION CONTRACTS:
FIVE-YEAR TREASURY NOTE FUTURES SETS DAILY VOLUME RECORD
CHICAGO, Dec. 2 -- Chicago Board of Trade (CBOT), the world's oldest and largest
futures exchange, volume highlights for November 1991:
Total exchange volume at 129,460,610 contracts year-to-date (YTD)
Average daily volume at 614,616 for November
Evening session volume up 10% from November 1990 at 351,355
Total exchange month end open interest up 1.9% from November 1990 at 1,846,257
Financial Complex
Ten-Year Treasury note futures up 15.8% from October 1991 and up 15.0% from
November 1990 at 661,270; up 2.5% YTD at 5,750,001
Ten-Year Treasury note options up 72.5% from November 1990 at 101,398
Five-Year Treasury note futures up 44.1% from October 1991, and up 37.4% from
November 1990 at 419,946; up 32.7% YTD at 3,033,075; record 55,632 contracts
traded November 26, 1991, breaking a daily volume high set on February 28, 1990,
when 36,470 contracts traded
Five-Year Treasury note options up 52.0% from October 1991 and up 74.1% from
November 1990 at 20,555; up 29.5% YTD at 104,702
Two-Year Treasury note futures up 31.0% from October 1991 and up 27.8% from
November 1990 at 27,520; up 154.3% YTD at 248,422
30-Day Interest Rate futures up 42.9% YTD at 101,864
Municipal Bond Index futures up 25.0% from October 1991 and up 16.7% from
November 1990 at 52,053
Total financial month end open interest up 5.2% from November 1990 at 1,039,264
Agricultural Complex
Agricultural options volume up 0.5% YTD at 4,816,213
Wheat futures up 17.3% from November 1990 at 271,927, and up 5.3% YTD at
2,884,343
Wheat options up 55.0% from November 1990 at 62,869, and up 27.9% YTD at
589,167
Corn futures up 2.7% from October 1991 at 907,729
Com options up 7.0% from November 1990 at 153,625
Oats futures up 70.2% from October 1991 at 34,558
Oats options up 31.9% from October 1991 at 211
Soybean options up 5.2% YTD at 2,081,552
Soybean oil options up 13.5% from October 1991 at 7,387
Diammonium phosphate futures up 33.9% from October 1991 at 4,701
Agricultural complex month end open interest at 796,104
more -
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Chicago Board of Trade
William F. O'Connor
Chairman
Chicago Board of Trade
BIOGRAPHY
William F. O'Connor, chairman, O'Connor & Company, was elected to serve a
two-year term as chairman of the Chicago Board of Trade (CBOT) in
December 1990. He is also chairman of the MidAmerica Commodity
Exchange, an affiliate of the cBoT. O'Connor previously served a partial
term as vice chairman and then as chairman of the CBOT in 1990. He has
been a member of the CBOT since 1955.
O'Connor currently serves as chairman of the Common Goals; Common
Goals Steering; Executive; and Expanded Hours committees. He also serves
as chairman of the Technology Subcommittee on Globex Implementation
and the Worldwide Information Transmission System Subcommittee.
He previously served as chairman of the Executive and Common Goals
committees, the Technology Subcommittee on Globex Implementation, the
Executive Committee on Competitive Stance and the Special Committee on
Expanded Trading Hours. He has also served as vice chairman of the
Executive Committee and the Executive Committee on Competitive Stance,
and as chairman of the Finance Committee and the Ad Hoc Committee to
Evaluate Real Estate Resources.
In addition, O'Connor served as chairman of the Board of Governors of the
Board of Trade Clearing Corp. (BOTCC) in 1984-1985, and was a member of
the BOTCC Board of Governors from 1983 to 1989. O'Connor also was a
member of the CBOT Nominating Committee in 1984 and 1985. He also
served on the Ad Hoc committees on the Study of Trading Efficiency;
Regulatory Policy; and to Address CBOT/LIFFE Linkage. Additionally, he
was a member of the Committee for Market Efficiency.
After becoming a CBOT member, O'Connor founded O'Connor and Company in
1959 where he remains a partner. He was a principal at First Options of
Chicago, Inc., when it was formed in 1973. He later became a principal at
O'Connor and Associates with its formation in 1977.
April 1991
LaSalle at Jackson
Chicago, Illinois 60604-2994
312 435-3500
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Chicago Board of Trade
Thomas R. Donovan
President and Chief Executive Officer
Chicago Board of Trade
BIOGRAPHY
Thomas R. Donovan was appointed president and chief executive officer of
the Chicago Board of Trade (CBOT) on August 17, 1982. The cBoT is the
world's oldest and largest commodity futures exchange. Donovan is also
president and chief executive officer of the MidAmerica Commodity
Exchange (MidAm) an affiliate of the cBoT.
Donovan serves on the Board of Directors of the CBOT and MidAm, and is a
member of the Executive Committee on Competitive Stance; cBoT, MidAm
and CRCE Executive committees; and Special Office of Investigation and
Audits Oversight Committee.
Prior to assuming the presidency, Donovan served as executive vice
president and secretary of the exchange. Before joining the Chicago Board
of Trade as secretary in May 1979, Donovan was prominent in city
government and served as administrative assistant to two Chicago
mayors. Starting in 1971, he served as administrative assistant to the
late Mayor Richard J. Daley and continued in that post through the
administration of Mayor Michael A. Bilandic. He holds a bachelor's degree
in business and economics and a master's degree in public administration
from the Illinois Institute of Technology in Chicago.
Donovan is a member of the boards of directors of the National Futures
Association; the Chicago Association of Commerce and Industry; the
Chicago Central Area Committee; the Commercial Club of Chicago; and the
Illinois Leadership Council for Agricultural Education. In addition, he
serves on the Chicago Association of Commerce and Industry Executive
Committee and is a member of the Council on the Graduate School of
Business of the University of Chicago. He is also chairman of the
Agribusiness Advisory Committee of the Chicago High School for
Agricultural Sciences.
August 1991
LaSalle at Jackson
Chicago, Illinois 60604-2994
312 435-3500
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FROM Annual Report
FUTURES AND FUTURES-OPTIONS TRADING VOLUME
Agricultural Futures
1990
1989
Wheat
2,876,270
3,237,709
Corn
11,423,027
9,270,784
Date
433,567
349,836
Soybeans
10,301,905
9,634,802
Soybean Meal
4,904,471
4,486,865
Scybean 011
4,658,302
4,300,797
Agricultural Options
Wheat
462,94)
484,932
Corn
2,116,302
1,519,164
Soybeans
2,089,382
1,975,440
Soybean Meal
191.429
112,474
Soybean oil
138,089
101,158
Date
7,334
I
Financial Futures
U.S. Treasury Bonds
75,499,257
70,303,195
Ten-Year Treasury Notes
6,054,222
6,109,518
Five-Year Treasury Notes
2,532,828
1,781,880
Two-Year Treasury Notes
110,789
I
Municipal Bond Index
696,861
1,068,028
30-Day Interest Rate
81,300
68,223
Japanese Government Bonds
3,062
I
Mortgage Backed
16,848
24,815
Financial Options
U.S. Treasury Bonds
27,315,411
20.784,019
Ten-Year Treasury Notes
936,754
1,168,196
Five-Year Treasury Notes
87,440
-
Municipal Bond Index
85,613
88,591
Japanese Government Bonds
475
I
Mortgage Backed total
19,231
13,564
Stock Index Futures
Major Market Index
951,325
1,086,550
t
TOPIX
230
-
CBOE 250 Index
-
13,945
Metal Futures
1000 oz. Silver
178,801
254,713
5000 oz. Silver
2,256
2,397
Kilo Gold
36,649
27,994
100 oz. Gold
7,814
73,362
Metal Options
1000 oz. Silver
1,398
8,346
Total
154,231,583
138,351,317
Memberships of the Chicago Board of Trade
(as of Dec. 31, 1990)
Full members
1402
Associate members
748
Commodity Options membership interests
643
Index, Debt and Energy membership interests
635
Government Instruments membership interests
215
Total
3643
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FUTURES AND FUTURES-OPTIONS TRADING VOLUME
160 Graph Key:
150 Options on Futures
140 Financial Instruments
130 Metal and Stock Indices
120 Agricultural Products
110 Total Volume
100 (Contracts in Millions)
90
80
70
6D
50
40
30
20
10
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
P. P.08/11
1990
1989
TO 912024566218
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1987
1986
FUTURES AND FUTURES - FUTURES-OPTIONS TRADING VOLUME
1985
1984
1983
12/06/1991 14:43 FROM
160 Graph Key:
150 Options on Futures
140 Financial Instruments
130 Metal and Stock Indices
120 Agricultural Products
110 Total Volume
100 (Contracts in Millions)
1982
1981
06
80
70
60
50
40
DE
02
10
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12/06/1991 14:43 FROM
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Chicago Board of Trade
CHICAGO MERCANTILE EXCHANGE®
CONTACTS: ANDREW YEMMA, CHICAGO MERCANTILE EXCHANGE
(312) 930-3434
DAVID PROSPERI, CHICAGO BOARD OF TRADE
(312) 435-7174
CME, CBOT SIGN AGREEMENT TO DEVELOP
BUDAPEST COMMODITIES EXCHANGE
FOR IMMEDIATE RELEASE
CHICAGO, September 4, 1991-The Chicago Mercantile Exchange (CME) and
Chicago Board of Trade (CBOT) today announced jointly the signing of an agreement with
the U.S. government to launch a three-phase project aimed at developing the Budapest
(Hungary) Commodities Exchange (BCE) into a successful domestic and regional
commodity market.
As outlined in a letter of agreement among the two Chicago exchanges and the U.S.
State Department, a $420,000 grant from the department's Trade and Development
Program (TDP) will fund the project's first phase, which entails preparation of a feasibility
study "to introduce the BCE to U.S. equipment, services and technology so that U.S.
companies are well-positioned" to participate in the venture's later phases.
"Economic freedom and political freedom go hand in hand," said CME Chairman
John F. Sandrier. He added, "The events that continue to unfold in the Soviet Union
underscore this fundamental principle and the special significance of this project. This
funding testifies to our commitment to assist these economies. We hope and expect that
this project is the first of many as Chicago, the risk management capital of the world,
exports its unique trading technology and expertise around the globe."
William F. O'Connor, chairman of the CBOT, said, "Budapest is well-positioned to
develop important regional commodity and financial markets that can become the
cornerstone of Hungary's free-market economy. We are pleased that the U.S. Trade and
Development Program has agreed to help us fund this worthwhile project. By enabling us
to expand our current efforts abroad, this grant will ultimately create new opportunities for
CBOT members as well as the Hungarian citizenry."
The Chicago-Budapest initiative has it roots in an October 1990 visit by leaders of
the two Chicago exchanges to the BCE. The Chicagoans embarked on the trip shortly after
the two exchanges had formed a Common Goals committee in mid-September 1990. While
in Hungary, Chicago and Budapest exchange officials signed a memorandum of
understanding, whereby the Chicago exchanges would provide technical assistance to the
- More .
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FOR IMMEDIATE RELEASE
July 17, 1991
News
Laura T. LaBarbera
(312) 435-3649
from the
Chicago Board of Trade
CBOT APPROVES CLEAN AIR ALLOWANCE FUTURES
CHICAGO, July 17 -- The Board of Directors of the
Chicago Board of Trade (CBOT) has approved contract
specifications for clean air allowance futures. The CBOT
will submit the terms of the clean air allowance futures
contract to the Commodity Futures Trading Commission for
approval.
CBOT Chairman William F. O'Connor said, "This innovative
new contract comes on the heels of the EPA's administration
of a market for a sulphur dioxide emissions allowance program
as provided under the 1990 Clean Air Act."
The underlying instruments for the contract are sulfur
dioxide emission allowances being issued by the U.S.
Environmental Protection Agency (EPA) under the 1990
amendments to the Clean Air Act. The allowances are an
integral part of a market-based sulfur dioxide emissions
reduction program calling for the reduction of 10 million
tons of sulfur dioxide emissions by the year 2000.
If approved, the contract will be traded in units of 25
1-ton sulfur dioxide emission allowances. Minimum price
fluctuations will be in multiples of one dollar per
allowance.
###
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Chicago Board of Trade
Fact Sheet
Under the 1990 amendments to the Clean Air Act (Act), a market-based
sulfur dioxide emissions reduction program is to be implemented.
The Act permits the appointment of a private entity by the U.S.
Environmental Protection Agency to administer this market.
Overall sulfur dioxide emission levels will be fixed by the issuance of
sulfur dioxide emission allowances for emission sources. Available
allowances will be reduced over the life of the program effectively
reducing overall sulfur dioxide emission levels. A $2000 per sulfur
dioxide ton penalty will be imposed on plants that exceed their held
allowance.
To encourage an economically-efficient reduction of sulfur dioxide
emissions, the Act requires the establishment of a market in allowances.
Such a market permits sulfur dioxide emission sources that can achieve
the least cost emission reduction to realize an economic gain through the
disposal of excess allowances.
The Act requires the establishment of allowance auctions and a direct
sale program plus support transaction services such as a pay collect
system. In addition, an allowance tracking system is needed to provide
information as to the effectiveness of the program.
The Chicago Board of Trade has certain objectives for this proposal:
A. The. establishment and administration of allowance transfer programs
via an annual auction and a direct sale.
B. The establishment and operation of active cash markets that ensure
the ability of market participants to acquire and dispose of
allowances.
C. The establishment and operation of active futures markets that
provide accurate pricing signals so that informed decisions can
be made regarding emission control.
D. The establishment of information systems that can provide data
necessary to evaluate the allowance program at the least cost.
LaSalieatJackson
Chicago, Illinois 60604-2994
312 435-3500
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CHICAGO BOARD OF TRADE
AN AGRICULTURAL OVERVIEW
The Chicago Board of Trade (CBOT) was founded in 1848 to bring economic
order to the local cash grain markets which were in much the same state
of chaos as agriculture is in the former Soviet Union today. Farmers
converged on Chicago at harvest to sell their grain. Farmers could not sell
their grain at any price. Supply overwhelmed demand. In the spring and
summer, supplies ran low. Grain prices became exhorbitant. Under such
conditions, merchants and farmers attempted to strike deals in advance of
their needs. Parties to these contracts frequently reneged because a
better price often could be found before the delivery date.
By founding the cBoT, the Chicago merchants established a central
marketplace where trade conformed to binding rules and regulations. The
CBOT worked in behalf of Chicago and agriculture influencing government
to improve transportation in the interior of the U.S. where the agrarian
society, which Thomas Jefferson envisioned when he negotiated the
Louisiana Purchase, was taking shape. The CBOT established the
foundation of the system of grain grading still in use.
From the early markets for immediate cash sales and contracts for future
delivery evolved the futures markets. Futures contracts are legally
binding agreements to make or take delivery of commodities. The
contracts are standardized in their terms of quantity, quality and date and
manner of delivery. The only variable to trade became price. With the
establishment of the exchange's clearinghouse as guarantor of all
contracts, the futures markets became a sensitive instrument to measure
price as the balance between supply and demand. By buying and selling
futures, market participants locked in prices for their anticipated needs
at acceptable prices. The open outcry auction conducted in the trading
pits assured that prices were "discovered" by competition and were thus
the best price of the moment. Dissemination of the prices discovered
provided a benchmark against which all prices could be evaluated. Prices
were relevant elsewhere in the U.S. because most merchants used the
futures to lock in the prices at which they conducted their cash business,
a practice known as "hedging."
12/06/1991 14:36 FROM
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The CBOT's grain futures markets (and since 1984, options on futures)
provide the same services today as they did at their conception during the
Civil War-the best price discovery and price risk management at the
lowest cost. CBOT prices are disseminated instantaneously around the
world and printed every major newspaper. Trading volume in agricultural
futures has grown with the production of American farmers. Futures are
traded on that production every time it changes ownership, protecting
each part of marketing chain. While only a small percentage of farmers
trade directly in the CBOT's markets, but every bushel they sell to their
local elevators has been hedged by the elevator operator using futures or
options. The grain is hedged in turn by every other merchant whether the
grain is headed for export or domestic use. Much of the grain produced
elsewhere in the world is hedged at the CBOT as well.
For example, U.S. farmers grew 7.9 billion bushels of corn in 1990. That
crop, and to a great extent corn grown in Canada, South Africa or
Argentina, translated into futures representing 50.5 billion bushels being
traded on the cBoT, many times actual production.
The CBOT has advanced in lock-step with American agriculture. As
American farmers came to supply the world with food, so the cBoT
became the world's grain futures market. Because of the success of the
application of futures markets to financial instruments, also an
innovation of Chicago, futures exchanges exist in most major
international financial centers. Because the international grain trade has
become so competitive and distorted by trade barriers and tariffs, other
foreign exchanges see opportunities to compete with the cBoT in
agricultural trade. Japan is establishing futures markets for agricultural
commodities which will be demand-driven. France is starting a futures
market for wheat within the closed confines of the European Community.
The cBoT welcomes competition, confident it can provide the best price at
the lowest cost provided the international regulatory playing field is
level.
12/06/1991 15:11 FROM
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TRANSMISSION 3 OF 3
News
FROM THE
Chicago Board of Trade
COMMUNICATIONS DEPARTMENT
OUR FAX NO: (312) 341-3306
PLEASE DELIVER IMMEDIATELY
DATE:
12-6
TIME:
To:
Michelle Nix
FROM:
David P. Prosperi
PAGES:
5
(INCLUDING COVER PAGE)
CONTACT
Florence
AT (312) 435-
3629
REGARDING ANY DIFFICULTY WITH THIS TRANSMISSION.
COMMENTS:
12/06/1991 15:12 FROM
TO 912024566218
P.04/05
FOR IMMEDIATE RELEASE
July 17, 1991
News
Laura T. LaBarbera
(312) 435-3649
from the
Chicago Board of Trade
CBOT APPROVES CLEAN AIR ALLOWANCE FUTURES
CHICAGO, July 17 -- The Board of Directors of the
Chicago Board of Trade (CBOT) has approved contract
specifications for clean air allowance futures. The CBOT
will submit the terms of the clean air allowance futures
contract to the Commodity Futures Trading Commission for
approval.
CBOT Chairman William F. O'Connor said, "This innovative
new contract comes on the heels of the EPA's administration
of a market for a sulphur dioxide emissions allowance program
as provided under the 1990 Clean Air Act."
The underlying instruments for the contract are sulfur
dioxide emission allowances being issued by the U.S.
Environmental Protection Agency (EPA) under the 1990
amendments to the Clean Air Act. The allowances are an
integral part of a market-based sulfur dioxide emissions
reduction program calling for the reduction of 10 million
tons of sulfur dioxide emissions by the year 2000.
If approved, the contract will be traded in units of 25
1-ton sulfur dioxide emission allowances. Minimum price
fluctuations will be in multiples of one dollar per
allowance.
# # #
12/06/1991 15:13 FROM
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Chicago Board of Trade
Fact Sheet
Under the 1990 amendments to the Clean Air Act (Act), a market-based
sulfur dioxide emissions reduction program is to be implemented.
The Act permits the appointment of a private entity by the U.S.
Environmental Protection Agency to administer this market.
Overall sulfur dioxide emission levels will be fixed by the issuance of
sulfur dioxide emission allowances for emission sources. Available
allowances will be reduced over the life of the program effectively
reducing overall sulfur dioxide emission levels. A $2000 per sulfur
dioxide ton penalty will be imposed on plants that exceed their held
allowance.
To encourage an economically-efficient reduction of sulfur dioxide
emissions, the Act requires the establishment of a market in allowances.
Such a market permits sulfur dioxide emission sources that can achieve
the least cost emission reduction to realize an economic gain through the
disposal of excess allowances.
The Act requires the establishment of allowance auctions and a direct
sale program plus support transaction services such as a pay collect
system. In addition, an allowance tracking system is needed to provide
information as to the effectiveness of the program.
The Chicago Board of Trade has certain objectives for this proposal:
A. The. establishment and administration of allowance transfer programs
via an annual auction and a direct sale.
B. The establishment and operation of active cash markets that ensure
the ability of market participants to acquire and dispose of
allowances.
c. The establishment and operation of active futures markets that
provide accurate pricing signals so that informed decisions can
be made regarding emission control.
D. The establishment of information systems that can provide data
necessary to evaluate the allowance program at the least cost.
LaSalleatJackson
Chicago, Illinois 60604-2994
312 435-3500
12/06/1991 14:55 FROM
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TRANSMISSION 2. OF 2
News
FROM THE
Chicago Board of Trade
COMMUNICATIONS DEPARTMENT
OUR FAX NO: (312) 341-3306
PLEASE DELIVER IMMEDIATELY
DATE:
12-6
TIME:
To:
Michelle Nix
FROM:
David P. Prosperi
PAGES:
13 (INCLUDING COVER PAGE)
CONTACT
Florence
AT (312) 435- 3629
REGARDING ANY DIFFICULTY WITH THIS TRANSMISSION.
COMMENTS:
12/06/1991 15:02 FROM
TO 912024566218
P.14/14
MEMBERSHIP PRICING
CLASS
LAST SALE
FULL
300,000 12/6
ASSOC
194,000 11/22
AM 1/2
135,000 5/22
COM
39,000 12/5
IDEM
6,800 12/4
Flaence 8435-7137
(312) 435-3500
Dave Prosperi
Event
CEO William FOCORROL
Mare Prout
Trade volumes
Dres. Thomas Donovan
Seat pices
How has percession
Copies of recent speeches
afferted you quis
Agricultural
by CEO
Fina
Bios of officers
Localcolor
Volume
Inside Building jokes
T 30 Aug billion
a day
Committee
Ag-Fallmembers
Friends
Contract bushels 5,000 ag
gr Ag agricultures
Finane
T-honds
$ 100,000
1981 75% og 191 75tina
Ag glow has continued to
25% 28ag
#. To bonds hurting
because not
as much risk
Seat gives shink
to hedge
375,-400 -
300,000 past months few
550,000 Furce Aug 87
Aug 88
geat
as Decle
current 300,000
14002 1402 full member
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