How Would You Vote On This Proxy?
- Posted by Jeff Carter
- on March 19th, 2014
Recently, I was part of a piece that was posted at Futures Magazine. Obviously, I am very disappointed with the way that $CME is trying to backdoor the B shares. I is my current intent to vote NO on the referendum. I gave the reasons why at Futures Magazine, and won’t dwell on them here. It is my hope that other industry publications and and industry organizations like the FIA and NFA will encourage their members that own B shares to vote No on the issue as well.
If you own a B share, it is extremely critical that you vote. CME tried to hide the issue among a bunch of mundane issues that have no pertinent impact on their business. It’s an old trick.
There are historical, economic, and strategic reasons that we structured the board the way we did when CME demutualized in 2000. Those reasons are unchanged today.
Given the backdrop of other issues in both the stock exchange, and futures exchange industry, this proxy issue becomes a paramount issue. If I was an HFT trader for example, I’d be really concerned. CME could use it as a wedge issue to disenfranchise electronic traders once a full transition in B share ownership is made. That won’t happen for a number of years. Generally, B share holders are long term holders.
The best way to combat really bad proxy initiatives is through transparency. Information kills bad ideas. The easiest way to get the information out is to share this link with everyone in the stock and futures industry. Great thing is with social media and email, it’s really easy to share things.:
Here is one excerpt.
Economic and strategic rationale for B share board members
The B share directorship is the most open and democratically elected directorship in all of corporate America. Anyone can run. All they need is ownership of a B share, to lease a B share, or to be assigned a B share by a clearing firm or individual. Anyone can appear before the nominating committees. Anyone that isn’t nominated can run on petition, provided they get enough signatures to run. If they campaign well, and get enough votes, they are elected to the board. There are no insider deals, or cronies that are guaranteed spots.
The B share directors are unable to comment in a public forum due to SEC regulations. I think that is a stupid interpretation of the laws. A director of a company ought to be able to air their own opinion on an issue, without compromising strategy or debate. It provides transparency into the board room and is better guidance for stock prices.
We didn’t ask A share directors, since we figure that they voted to put the proposal on the ballot.
If you endorse this, we can add your name. Email me, and I can add it. But, the easiest way to show support is to comment at the Futures website.
CME management has long had disdain for the members that got them to where they are today. They have avoided a conversation with B share holders and even directors. They may have intentionally trampled the value if the recent HFT investigation shows there are favorable rates for selected traders.
It’s time to have constructive conversation. Only a NO vote on the proxy and keeping the B shareholders whole will initiate that debate.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Jeffrey Carter is an angel investor and independent trader. He specializes in turning concepts into profits. He co-founded Hyde Park Angels one of the most active angel groups in the United States in April of 2007. He previously served on the Chicago Mercantile Exchange Board of Directors. He has done market commentary for (More...)