Each of the undersigned conducts trading activities on the open-outcry futures exchanges of the Chicago Mercantile Exchange (CME). Open outcry exchanges provide customers with significant benefits, such as providing liquidity, transparency, and price stability to futures markets. One of the main benefits of the open-outcry system is that open out-cry traders make markets during the final minutes of daily trading crucial to the settlement process. This is one reason our customers choose to place orders through open-outcry trading, rather than on the electronic exchange.
Recently, the CME administrative staff has introduces a proposal that settlements for several futures products will be determined by using blended rate of open-outcry and electronic information determined by an algorithm. This proposed change was introduces without any input from traders who make markets on these exchanges or from CME’s customers. Further, neither customers nor market makers will have any ability to comment on the approval of this rule, or to refine the way and timing during which these rule changes are implemented.
The Chicago Mercantile exchange provides thousands of jobs in Chicago and the State of Illinois. Our previous experience with the implementation of an electronic settlement, (Rough Rice and Chicago Soft Red Winter Wheat) has drastically alter the market conditions of the contracts and the CME exchange. As a result, the pits' trading these contracts have lost almost all of their employees. We believe that implementing these rules will result in a similar loss of jobs in the Soybean, Soy meal, Soy Oil, Corn, Live Cattle, Lean Hogs and Feeder Cattle pits where these contracts trade, leading ultimately to the loss of a great majority of these thousands of jobs.
Out of concern for providing good customer service, and our desire to retain professional jobs in Illinois, we believe that:
The proposed administrative rule changes must NOT be implemented prior to determining that the changes will not lead to:
o Subject to HFT manipulation;
o A reduction in liquidity in the market;
o An increased risk of price volatility on these contracts; and
o A loss of Illinois jobs.
The process of determining the impact the impact of proposed administrative rule changes must include input from existing customers and market makers, and should not be proposed by fiat by CME staff.
Market makers and customers must have a meaningful role in planning the timing and implementation of any mew settlement rules affecting their products.