Memberships at Chicago's most exclusive financial and commodity futures clubs have been getting pricier. Full seats at the Chicago Mercantile Exchange late last week hit $575,000, their highest point since January 1996.
At the Chicago Board of Trade, full seats were going for $520,000, up from $410,000 at the beginning of the year.
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Seat prices represent a member's equity stake in the exchange as well as the right to trade its products. Officials at both exchanges would not comment on why their seat prices fluctuate.
But members were more than happy to discuss why their investments were increasing in value.
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The most obvious answer is that both exchanges are in the process of changing their long-standing tradition of membership organizations and transforming themselves into for-profit companies that would, in theory, be leaner and better able to compete in the increasingly electronic and competitive trading world.
Exchanges have several classes of memberships, and members have been waiting to find out how they would translate into shares in the new exchange companies. Increasing membership prices, they argue, bode well for what their seat prices would be worth in the for-profit environment as well as how future shareholders in the exchange companies will perceive them.
At the Merc, all classes of membership shot up between 8 and 15 percent since the first week of February. At the Board of Trade, the various classes of seat prices have jumped between 6 and 11.4 percent.
The Chicago Board Options Exchange, which had a record-breaking volume year of 254.3 million options contracts traded in 1999, has seen no change recently to its full-seat price of $415,000. The 23 percent volume increase pushed it ahead of the Merc in terms of contracts traded; the Merc traded 200.7 million contracts in 1999, an 11 percent drop from 1998 volume levels.
To date, however, the CBOE has taken a neutral stance on shedding its membership in favor of a for-profit operation.
