Edgar Filing: CBOT HOLDINGS INC

Form 425

Filed by Chicago Mercantile Exchange Holdings, Inc. pursuant

to Rule 425 under the Securities Act of 1933, as amended, and

deemed filed pursuant to Rule 14a-6 under the Securities

Exchange Act of 1934, as amended.

Subject Company: CBOT Holdings, Inc.

Subject Company’s Commission File No.: 001-32650

CME/CBOT Proposed Merger

March 22, 2007

Investor Presentation

Confidential DRAFT

Discussion of Forward-Looking Statements

Forward-Looking Statements

This

presentation

may

contain

forward-looking

information

regarding

Chicago

Mercantile

Exchange

Holdings

Inc.

and

CBOT

Holdings,

Inc.

and the

combined

company

after

the

completion

the

merger

that

are

intended

covered

the

safe

harbor

for

“forward-looking

statements”

provided

the

Private

Securities

Litigation

Reform

Act

1995.

These

statements

include,

but

are

not

limited

to,

the

benefits

the

business combination

transaction

involving

CME

and

CBOT,

including

future

financial

and

operating

results,

the

new

company’s

plans,

objectives, expectations

and

intentions

and

other

statements

that

are

not

historical

facts.

Such

statements

are

based

current

beliefs,

expectations, forecasts

and

assumptions

CME

and

CBOT’s

management

which

are

subject

risks

and

uncertainties

which

could

cause

actual

outcomes and

result

differ

materially

from

these

statements.

Other

risks

and

uncertainties

relating

the

proposed

transaction

include,

but

are

not limited

the

satisfaction

conditions

closing;

including

receipt

shareholder,

member,

antitrust,

regulatory

and

other

approvals

the proposed

terms;

the

proposed

transaction

may

not

consummated

the

proposed

terms;

uncertainty

the

expected

financial

performance of

CME

following

completion

the

proposed

transaction;

CME

may

not

able

achieve

the

expected

cost

savings,

synergies and

other strategic

benefits

result

the

proposed

transaction;

the

integration

CBOT

with

CME’s

operations

may

not

successful

may

be materially

delayed

may

costly

difficult

than

expected;

general

industry

and

market

conditions;

general

domestic

and

international

economic

conditions;

and

governmental

laws

and

regulations

affecting

domestic

and

foreign

operations.

For

information

regarding

other

risks,

see

Item

CME’s

Annual

Report

Form

10-K

for

the

fiscal

year

ended

December

31, 2006.

Copies

said

10-K

available

online

http://www.sec.gov

request

from

the

CME.

You

should

not

place

undue

reliance

on forward-looking

statements,

which

speak

only

the

date

this

presentation.

Except

for

any

obligation

disclose

material

information under

the

Federal

securities

laws, CME

undertakes

obligation

release

publicly

any

revisions

any

forward-looking

statements

reflect events

circumstances

after

the

date

this

presentation.

Additional

Information

CME

and

CBOT

have

filed

definitive

joint

proxy

statement/prospectus

with

the

Securities

and

Exchange

Commission

(SEC)

connection

with the

proposed

transaction.

This

material

not

substitute

for

the

definitive

joint

proxy

statement/prospectus

any

other

documents

CME

and CBOT

have

filed

will

file

with

the

SEC.

Investors

and

security

holders

are

urged

read

the

definitive

joint

proxy

statement/prospectus

and any

other

relevant

documents

filed

CME

CBOT

because

they

contain

will

contain

important

information

about

the proposed

transaction.

The

definitive

joint

proxy

statement/prospectus

is,

and

other

documents

filed

CME

and

CBOT

with

the SEC

are

will

be,

available

free

charge

the

SEC’s

Web

site

(www.sec.gov)

from

Chicago

Mercantile

Exchange

Holdings

Inc., Shareholder

Relations

and

Membership

Services,

South

Wacker

Drive,

Chicago,

Illinois

60606,

Attention:

Beth

Hausoul.

------------------ ----

CME

and

its

directors,

executive

officers

and

other

employees

may

deemed

participants

the

solicitation

proxies

connection

with

the

proposed

transaction.

Information

about

CME’s

directors

and

executive

officers

available

the

definitive

joint

proxy statement/prospectus.

------------------ -----

Statements

included

this

presentation

relating

the

ICE

offer

reflect

the

views

CME’s

management.

------------------ ----

This

document

shall

not

constitute

offer

sell

the

solicitation

offer

buy

any

securities,

nor

shall

there

any

sale

securities

any

jurisdiction

which

such

offer,

solicitation

sale

would

unlawful

prior

registration

qualification

under

the

securities

laws

any

such

jurisdiction.

offering

securities

shall

made

except

means

prospectus

meeting

the

requirements

Section

the

U.S.

Securities

Act

1933,

amended.

Terry Duffy

Executive Chairman

Confidential DRAFT

CME’s superior offer has larger and more immediate

benefits to CBOT shareholders and members

•

Solidifies combined company’s status as the premier global

exchange, positioning combined company

For continued growth as a consolidator rather than a target

As the partner of choice for matching and/or clearing ASP

opportunities

•

Creates $70M in operational and cost efficiencies for

customers

•

Creates immediate scale advantages

•

Strengthens Chicago as the leader in derivatives

•

Focuses the combined company on generating growth,

rather than duplicative integration and development

Globally

•

Builds on over 200 years of innovation to the benefit of

customers and shareholders

•

$125+ million in estimated annual cost savings

•

Expected to be accretive to GAAP earnings 12 –

months post-close

•

Potential revenue synergies to be shared by combined

shareholders

•

Enhances operating leverage

Strategically

Attractive

Financially

Compelling

Combination will establish the world’s largest derivatives exchange to the

benefit of shareholders, members and customers

In over-the-counter (OTC) markets

Craig Donohue

Chief Executive Officer

Confidential DRAFT

Better together

ICE’s proposal

•

offers CBOT shareholders a weaker currency

•

will limit CBOT’s comparative future growth potential and

value creation opportunities

•

exaggerates the estimated synergies

•

poses significant execution and integration risks that could

adversely affect customers and shareholders

Operationally

Strategically

Financially

Confidential DRAFT

OTC derivatives markets are larger and growing faster

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

DEC 2001

DEC 2003

DEC 2005

($ in billions)

$23,764

$111,178

$36,787

$197,167

$57,816

$297,670

Exchange-traded

OTC

CAGR 2001-2005

OTC –

28%

Exchange Traded –

25%

Total Value Outstanding Positions

(measured in notional value as of year-end)

Source: March 2007 BIS (Bank of international Settlements)

Quarterly Review

Confidential DRAFT

CBOE exercise rights

•

ICE has proposed same exact structure

•

ICE has not identified specific changes

•

ICE offered CBOT shareholders no guarantees or

promises

•

CBOE has not consented to ICE’s

proposal

ICE’s vague structure to preserve CBOE exercise rights is not

a differentiating factor

Confidential DRAFT

WTI Average Daily Volume

NYMEX on CME Globex vs. ICE

CME successfully integrates NYMEX, and takes market

share back from ICE

(by month; notionally adjusted; contracts in thousands)

100

200

300

400

JUN

JUL

AUG

SEP

OCT

NOV

DEC

JAN

360

185

116

NYMEX WTI

on CME Globex

ICE WTI

The

Electronic

Trading

Comparison

FEB

MAR

To date

Source: Derived from NYMEX web site and CME data

Confidential DRAFT

Monthly

Average Daily Volume

Total ICE Futures & NYBOT

(contracts in thousands)

CME FX Volume equals ICE/NYBOT total volume,

and shows faster growth

200

400

600

800

JUL

SEP

NOV

JAN

MAR

529

700

200

400

600

800

373

721

Monthly CME FX ADV

vs. NYBOT FX ADV

(contracts in thousands)

CME

offers

extremely

liquid

markets

–

CME’s

third

largest

product and is currently averaging the same amount of volume

as all ICE futures and all NYBOT combined

JUL

SEP

NOV

JAN

MAR

CME FX

NYBOT FX

Source: CME data, ICE and NYBOT websites

Confidential DRAFT

Diversity of ADV and Revenue

CME Q406 ADV

Interest Rates

56%

Equity Mini

30%

Equity Standard

10%

Commodities & Alt

Investments

ICE/NYBOT Q406 ADV

Energy

87%

Soft Commodities

13%

CME Q406

Clearing & Transaction Revenue

Interest Rates

44%

Equity Standard

Equity Mini

32%

16%

Commodities & Alt

Investments

ICE/NYBOT Q406

Clearing & Transaction Revenue

Energy

84%

Soft Commodities

16%

Sources: Company press releases and SEC filings

ICE volume and revenue are limited to the energy and soft commodity markets

Confidential DRAFT

In a challenging market, ICE’s unseasoned stock

declined 20%

•

ICE’s volatility is 30% higher than

CME’s

•

Since ICE’s IPO, ICE’s P/E has

fluctuated more than 26 points vs.

CME’s fluctuation of 10 points over

the same time period

•

ICE has a limited track record as a

public company

ICE has been public for only 1.5 years

(CME has been public for over 4 years)

CME has a history of exceeding

earnings expectations

___________________________

February 21, 2007 represents ICE’s all time high share price.

Exchange

index

includes

TSX,

OMX,

ASX,

Hong

Kong

Exchange,

Singapore

Exchange,

Deutsche

Boerse,

Euronext,

Bursa

Malaysia,

LSE,

Bolsas

Mercados,

ISE

and

NYSE.

CME’s stock is less volatile than ICE’s

Indexed Price Performance

Quality of Currency Characteristics

2/21/2007

2/28/2007

3/7/2007

3/14/2007

100

105

Indexed Price

(19.49%)

ICE

(9.16%)

Exchange

Index

(0.58%)

CME

(4.67%)

S&P 500

(1)

(2)

Source: Lehman Brothers

Confidential DRAFT

Sources: Company press releases and SEC filings

We operate in a global marketplace

1,000

2,000

3,000

4,000

5,000

6,000

5,313

3,269

4,628

2,043

897

604

Note:

Individual equity options excluded

CME is the largest global derivatives exchange and has a strong

partnership with the leading energy exchange, while

ICE/NYBOT is not the largest in any segment

Q406 Average Daily Volume

By Exchange

(contracts in thousands)

CME

CBOT

Eurex

ENXT

NYMEX

ICE/

NYBOT

Interest rates

Equities

Foreign exchange

Commodities

Energy

Metals

Confidential DRAFT

$45,000

$90,000

$135,000

$180,000

$225,000

$270,000

Interest

Rates

Credit

Default

Equity-linked

Commodity

OTC opportunities are larger with CME

Source: June 2006 Notional Value Outstanding

per March 2007 BIS Quarterly Review

$262,296

$38,111

$20,352

$6,783

$6,394

OTC opportunities in CBOT will be more effectively pursued

by leveraging CME’s resources, experience and investments

across both large and small OTC market segments

CME Clearing 360

•

FXMarketSpace FX cash

clearing and interest rates

swaps clearing

Alternative Markets

•

Trading and clearing of

weather, real estate,

economic indexes

commonly traded in

OTC markets

Credit Derivatives

•

Trading and clearing for the

$20 trillion (outstanding)

OTC credit derivatives

market

•

The $250 trillion

(outstanding) interest

rate swaps market

•

OTC Cash FX trading -

$2 trillion in daily turnover

Jamie Parisi

Managing Director & Chief Financial Officer

Confidential DRAFT

CME/CBOT planned synergies

Technology

50%

Trading Floor

/ Operations

15%

Administrative

35%

Cost Savings Areas

Total: $125+ million

Expected cost savings of $125+ million annually,

beginning in year two post-close

Confidential DRAFT

ICE’s exaggerated synergies

•

The $50M revenue synergies are highly speculative

ICE provided no quantifiable basis for revenue synergies

CME’s revenue synergies with CBOT would be greater driven by CME

Globex distribution and speed, as well as adjacency to sizable OTC

markets in CME’s multiple asset classes

•

The $100M operational expense synergies are questionable

ICE provided limited insight as to how synergies would be achieved

ICE claims that they can remove 43% of the combined expenses,

excluding d & a -

well outside the range of precedent transactions

CME believes a reasonable range is closer to $40M to $65M versus

CME/CBOT highly developed synergy estimate of $125M+

•

The $90M clearing synergies are unrealistic

ICE has not included significant expenses necessary to handle the

increased clearing volume

Some of the synergies ICE is claiming could come from CBOT’s

standalone alternatives

CME believes a reasonable range could be $20M to $40M

ICE’s synergy estimates are not based in reality

Confidential DRAFT

ICE’s cost synergies are inflated relative to other

mergers

ICE/CBOT cost synergies represent 43% of the combined expense base

versus the 9% average for comparable deals

43%

19%

10%

13%

11%

10%

15%

20%

25%

30%

35%

40%

45%

50%

ICE / CBOT

CME / CBOT

Nasdaq /

INET ECN

NYSE /

Euronext

ASX / SFE

ICE / NYBOT

Deutsche

Börse /

Clearstream

NYSE /

Archipelago

OM Gruppen

/ HEX

Euronext /

LIFFE

% of Combined

Expense Base

Average: 9%

(Excluding ICE / CBOT)

Source: Lehman Brothers

Note: Excludes depreciation and amortization

Kim Taylor

Managing Director &

President CME Clearing

Confidential DRAFT

Benefits of CME Clearing

•

Offers rock solid operational reliability

•

Provides high degree of risk management and

financial integrity

•

Delivers low-cost services

•

Leverages scalability and adaptability

Confidential DRAFT

Operational capacity and reliability

•

CME has operational capacity to clear business of

CBOT’s magnitude

NYBOT would need to scale up clearing capacity on day 1

more than 18 times to accommodate CBOT average volume

Notes: CME and CBOT YTD through 3/16/07, NYBOT YTD through 2/28/07. NYBOT Average Transactions are CME estimates

Average Transactions

Average Volume

1,400

809

500

1,000

1,500

CME

CBOT

NYBOT

13x

6,700

3,900

212

2,000

4,000

6,000

8,000

CME

CBOT

NYBOT

18x

Confidential DRAFT

Operational capacity and reliability

•

Clearing operational capacity & reliability at peak

activity levels is extremely critical to CBOT business

NYBOT would need to scale up clearing capacity by 30 times to

handle CBOT peak volume

Peak Transactions

Peak Volume

Note: CME and CBOT Peak volumes occurred on 2/27/07, NYBOT peak volume occurred on 2/9/07. NYBOT Peak Transaction are

CME estimates

2,600

2,000

106

1,000

2,000

3,000

CME

CBOT

NYBOT

19x

13,700

11,100

373

2,500

5,000

7,500

10,000

12,500

15,000

CME

CBOT

NYBOT

30x

Confidential DRAFT

Risk management and financial integrity

•

CME offers important innovation over clearing houses

that offer solely net or gross margining:

CBOT house portfolios are margined net by CME

CBOT customer portfolios have the choice between

net margining or gross margining

For some portfolios, net margining is more efficient

and for other portfolios, gross margining is more

efficient

ICE’s net margining proposal is a step backwards from CME’s

optimal margining innovation

Confidential DRAFT

Risk management and financial integrity

•

CME Clearing is widely recognized as the industry leader in

risk management

•

109 year, default-free

history

•

Industry leading risk management:

Real-time 24 hour risk monitoring

Stress testing at the clearing member & large client levels

Specialized real-time risk monitoring for ATS & other large

day traders

On-site risk reviews of clearing member firms

Real-time risk management support to clearing members

•

Proven crisis management

CME has real-time risk management 24 hours a day, 6 days a

week, ensuring early detection of large risk exposures

Confidential DRAFT

Risk management and financial integrity

•

CME Clearing has extensive experience & capabilities to risk

manage business of CBOT’s scope & scale

CME

CBOT

NYBOT

Open Interest

44.5M

15.9M 2.5M

Average daily MTM:

$1.8B

$.05-$.1B (est.)

Record MTM:

$8.5B

<$.2B (est.)

Note:

1. As of February 28, 2007. NYBOT February 2007 Monthly Volume Report, CBOT February 2007 Monthly Open Interest Report and

CME Volume Tracker

CME is experienced with managing mark-to-market

flows 40 times greater than NYBOT

Confidential DRAFT

Cost and capital efficiencies

•

The combination of CME & CBOT products under a single clearing

house resulted in significant capital savings & efficiency for the

market

Potential Margin Efficiencies Lost:

$700 million-$1 billion +

Potential Guarantee Fund Requirements:

$550 million

NYBOT Ad’l

Req:

$350 million

CME Savings Lost:

$200 million

Total disruption to capital efficiency:

$1.3 -

$1.6 billion

ICE cross-margining savings of $50 million doesn’t compare to

margin savings with CME/CBOT

Confidential DRAFT

Growth capabilities

•

With its current capabilities, CME Clearing has created a strong

foundation to continue growing the combined business of the

CME & CBOT

•

Clearing provides the following capabilities to support or drive

growth in our combined business base:

•

Operational scale

•

Product scope

•

Functional richness

•

Deep risk management experience

•

OTC growth capabilities (Clearing360)

•

NYBOT’s focus will be on absorbing rather than growing the

CBOT business

5 of the top 10 CBOT volume leaders are not NYBOT clearing

members

Phupinder Gill

President & Chief Operating Officer

Confidential DRAFT

CME ready to integrate, while ICE offer has significant

execution risk

Slow Integration

66%

Low revenues,

cash, profitability

125

PWC

Poor Strategy

50%

Poor cash flow

relative to peers

Healy et. al.

Weak Core Business

Large Target Size

Overly Optimistic

Slow Integration

77%

Failure to earn

back capital in 3

years

116

McKinsey & Co.

Poor Planning

Poor Communication

Slow Integration

70%

Would not buy

again

150

Mitchell/EIU

Lack of Vision

Lack of Alignment

Slow Integration

63%

Poor shareholder

returns after 3

years

215

Mercer

Causes

% Failed

Definition of Failure

Sample

Size

Study

2/3’s of mergers fail to increase shareholder value due to poor

integration execution

Source: PRITCHETT, LP

Confidential DRAFT

100

120

'02

'03

'04

'05

'06

'07

Source: CME 2006 and 2003 10-Ks, CME press release dated 1/30/07, ICE 8-K

filed 3/13/07, ICE 2006 10-K, ICE S-1 filed 3/22/05, and ICE press release

dated 2/7/07.

To support scaling of technology infrastructure, CME has spent $360M

over the past 5 years in capital reinvestment, while ICE has spent

less than $70M

100

120

'02

'03

'04

'05

'06

'07

CME

ICE

($mm)

Guidance

(For Combined

Company)

$110-115

$88

$56

$25-30

$20

$21

Capital expenditures comparison

Capital expenditures

Confidential DRAFT

Potential for revenue synergies from international

growth are larger with a CME/CBOT combination

•

CME has global products across asset classes

•

CME has expanded international sales and marketing staff in the last year

•

Amsterdam

•

Dublin

•

Paris

•

Gibraltar

•

London

•

Milan

•

Singapore

Europe

Asia Pacific

•

CME has international relationships in China, India and Singapore

•

Equities-Nikkei 225, MSCI EAFE, S&P 500

•

Interest rates –

Eurodollar, Euroyen

•

FX –

Euro, Yen, Chinese Reminbi, Korean Won

•

CME has telecommunications hubs globally

Algeria,

Argentina,

Australia,

Austria,

Bahamas,

Barbados,

Belgium,

Belize,

Bermuda,

Brazil,

British

Virgin

Islands,

Bulgaria,

Canada,

Cayman

Islands,

Chile,

China,

Costa

Rica,

Cyprus,

Czech

Republic,

Denmark,

Ecuador,

Egypt,

Finland,

France,

Great

Britain,

Germany,

Gibraltar,

Greece,

Hong

Kong,

Hungary,

Iceland,

India,

Indonesia,

Iran,

Ireland,

Isle

Man,

Israel,

Italy,

Jamaica,

Japan,

Jordan,

Kuwait,

Lebanon,

Liechtenstein,

Luxembourg,

Macau,

Madagascar,

Malaysia,

Mauritius,

Mexico,

Monaco,

Mongolia,

Namibia,

Netherlands,

New

Zealand,

Norway,

Pakistan,

Peru,

Philippines,

Poland,

Portugal,

Puerto

Rico,

Republic

Korea,

Romania,

Russian

Federation,

Saint

Pierre

and

Miquelon,

Saudi

Arabia,

Senegal,

Seychelles,

Singapore,

Slovakia,

South

Africa,

Spain,

Sweden,

Switzerland,

Taiwan,

Thailand,

Turkey,

United

Arab

Emirates,

US,

Virgin

Islands,

Venezuela

•

CME has Globex distribution of institutional screens spanning 88+

countries and foreign jurisdictions

Confidential DRAFT

CME Globex has the capacity to handle large

transaction volumes at a high speed

Globex Transaction Volume (2003 to 2007)

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Open Interest

Matched Trades

Order Volume vs Speed

200,000

400,000

600,000

800,000

1,000,000

1,200,000

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00

Total Order Volume

Avg Futures RTT

Avg Options RTT

MD Feed Handler

“We had many challenges both organizationally and

technologically”

(referring to the NYBOT acquisition)

While orders/transactions grew by a factor of 30,

the average round trip time fell 80% from its 2004 level

Chuck Vice, ICE President & COO, February 7, 2007

Source: CME company database

Source: Chuck Vice, ICE President & COO, ICE 4Q2006 earnings conference call transcript, February 7, 2007

Confidential DRAFT

CME: Robust functionality for fast, protected and

efficient trading

Pro rata with configuarable

TOP minimum/maximum quantity or match %-age

Pro rata small lot aggregation

Auction or automated request for cross

Pro rata with or without TOP (and LMM)

LMM with or without TOP

CME Offers Critical Customer Protection Functionality

CME Offers Robust and Efficient Matching

Market or stop order with protection points

Mass quote governor

In-flight fill mitigation logic

eStop

option support

Stop spike protection for futures

Covered delta and side reasonability check

Market maker traded quantity, execution and new quote fill protections

Mass quote cancel on disconnect

ICE

CME

CME Offers Theoretical Price Function for Spread Leg Price Assignment

Confidential DRAFT

Customers win with CME…

A CME transaction…

•

Retains Common Clearing Link Efficiencies

CME/CBOT retains $700M -

$1B+ cross margining efficiencies versus

ICE/CBOT estimated $50M

•

Keeps costs lower for end users and firms

CME/CBOT transaction estimated to generate at least $70M in annual savings

ICE

transaction

requires

interfaces

deposits

with

two

clearing

houses

rather than one, as well interface to ICE electronic platform

•

Gives CBOT customers access to Globex

•

Allows trading of complementary products on a single platform

•

Greatly reduces operational and financial risk from migrating

clearing

Clearing firms and market users, not ICE/CBOT, will bear this risk

“We are putting tremendous demands on traditional

NYBOT clearers and customers”

(to bring the products

up electronically) –

Jeff Sprecher, CEO, 2/7/07

Source: Jeff Sprecher, ICE CEO, ICE 4Q2006 earnings conference call transcript, February 7, 2007

Appendix

Confidential DRAFT

CME Clearing has proven to be a global leader in

risk management

•

Black Monday –

Dow fell 22% on October 19, 1987

•

Drexel Burnham Lambert Parent–

December 21, 1988 pleaded

guilty to insider trading. February 13, 1990 DBL filed for

bankruptcy

•

Barings Bank –

Declared insolvent on February 26, 1995 after

failing to find a buyer. Afterward, ING agrees to buy the bank for

•

LTCM –

September 1, 1998 Meriwether discloses the fund’s

massive losses and limits client withdrawals. September 23rd, a

consortium of banks agrees to inject $3.5B in funds at the NY

Federal Reserve Office

•

Refco Parent –

October 10, 2005, Refco discloses $430 million in

hidden debt. October 17th, Refco filed for bankruptcy

•

Amaranth/Motherock

–

CME facilitated daily information sharing

among multiple exchanges pertaining to liquidation & transfer of

positions, as well as loss coverage

CME played a central role in the successful conclusion of a

number of events

Confidential DRAFT

NYBOT and the Klein default

•

First West owned by NYFE (a division of NYBOT) Chairman

Norman Eisler defaults causing Klein to default to NYBOT on May

17, 2000

The firm is undercapitalized (pro forma) by $3.8 million

•

Mr. Eisler settles with CFTC for $4.9 million for price

manipulation and false reporting

•

CFTC also issues an order against NYFE (and $75,000 penalty)

for failure to enforce its own rule for determining settlement

prices

•

Klein files a $100 million lawsuit against NYBOT blaming the

exchange for the default due to Mr. Eisler’s role in setting

settlement prices and lackadaisical crisis response by exchange

senior management

Unlike NYBOT, CME Clearing’s approach to risk management

has prevented any CME clearing firm defaults

Confidential DRAFT

Operational functionality

•

CBOT business depends heavily on post-trade processing

functionality:

20% of CBOT customer volume is for Give-up/APS

Trade transaction account for only approximately 20% of

total clearing transactions (peak clearing transactions of

15M for CME & 7.4M for CBOT)

CME has supported Give-up functionality for 15 years & a 2-way API for

the past 5 years. Both are critical to processing CBOT business

State-of-the-art broker billing and give-up payment systems

Ability to interface with electronic give-up agreement system

Industry leader in developing messaging technology

Robust state-of-the-art post trade management system

Proven, reliable 2 way API to support real time risk management

Support enhanced order routing and trading floor technologies

NYCC

CME

Clearing Technology