CHICAGO -- Leslie Rosenthal, chairman of the Chicago Board of Trade, Thursday proposed splitting the exchange into four groups in an effort to bring more money and traders into the futures market.
Under Rosenthal's plan, members would be able to sell or lease trading privileges in some of those groups while continuing to trade in their primary pit.
'This puts money in the pocket of the member,' Rosenthal said, 'and it gives the exchange additional income, whether the guy leases or sells.'
The exchange would benefit from increased dues assessments and transaction fees.
The plan would allow traders a way to make money on growing financial futures without forcing them to trade the new contracts.
It also allows T-bond traders to make money selling or leasing rights to trade grain futures.
'If you trade grain, you can concentrate on that and sell or lease trading in Treasury bond futures,' Rosenthal said.
The plan would increase CBOT's income by more than $5 million a year, Rosenthal estimated.
Rosenthal first outlined the plan during a meeting Wednesday with CBOT members. The new divisions would be the agricultural and associated markets (AAM), the government instruments market (GIM), the index, debt and energy market (IDEM), and the commodity options market (COM).
The CBOT has 1,402 full members and 544 associate members.
Under the plan, full members would retain trading rights on all contracts and get the right to sell or lease rights to trade in any of the markets.
The associate members, who currently are allowed to trade only financial instruments, plywood and gold, would be able to sell or lease trading privileges separately in IDEM and COM.
Full CBOT membership goes for $250,000 a seat. Associate membership costs $130,000. The plan would enable those who cannot afford a seat to trade anyway.
Rosenthal plans to submit the proposal to the CBOT directors at their regular meeting Feb. 16 and then seek a vote of the membership.
Rosenthal said the plan is designed to supplement existing linkage with other exchanges and denied speculation he is out to take over the Chicago Board Options Exchange.
The Chicago Mercantile Exchange last week adopted a similar plan, creating an index and options division that would join existing divisions for financial futures and agriculture futures.