A war for the hearts, minds and votes of CBOT Holdings Inc. shareholders escalated on Monday, two weeks ahead of a July 9 vote that could decide the fate of the No. 2 U.S. futures mart.
Top officials from the Chicago Board of Trade's parent sent a letter urging shareholders and members to reject overtures from IntercontinentalExchange Inc. and approve a merger with Chicago Mercantile Exchange Holdings Inc.
The proposal from ICE, though it currently values CBOT about $1.3 billion higher than CME's bid, is uncertain and entails higher risk, CBOT Chief Executive Bernard Dan and Chairman Charles Carey wrote in the letter.
There is no guarantee that any premium in short-term value based on ICE's current stock price will be there months from now, the letter said.
CME followed up with its own missive, telling CBOT shareholders that ICE does not have the technology or clearing capabilities to manage CBOT business.
Atlanta-based ICE has proposed that CBOT's derivatives trades would be handled through its U.S. clearing facility at the New York Board of Trade.
NYBOT announced on Monday its trading volume in June had hit 5 million contracts for the first time. But CBOT's daily volume routinely exceeds that amount; average daily volume this month has been almost 5.1 million contracts.
ICE said on Monday it has started to mail proxy materials to CBOT shareholders urging them to reject the CME merger.
If consummated, the ICE proposal would provide significantly greater financial value than the proposed CME merger, ICE said in its letter.
Meanwhile, the Chicago Board Options Exchange, the largest U.S. options exchange, has postponed a vote on its proposed deal with ICE on the future of exercise rights held by some CBOT members, which allow them to also trade equity options at
The agreement, announced in May, calls for each full CBOT member to receive $500,000 per trading right if ICE succeeds in buying CBOT Holdings. In a memo to its members dated June 21, CBOE said a membership ballot to approve the deal, scheduled for July 3, was now expected later in July.
In afternoon trading on the New York Stock Exchange, CME was down $1.99, or 0.3 percent, at $537.96. CBOT was down $3.62, or 1.7 percent, at $203.92 and ICE was down $2.74, or 1.7 percent, at $152.82.