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| | Dante Federighi (DNT) Candidate for CME GroupClass B-2 Board Member | | dante@fortezzacap.com 844-FORTEZZ www.dantefederighi.com |
Dear Fellow Members andClass B-2 Shareholders,
I kindly ask for your vote in support of my candidacy for the CME Board of Directors. I am a CME member since 1997 and an active user of our products since my days in the Eurodollars futures pit. I am currently the Founder/CPO of the Fortezza Forza RMC Fund.I have a fresh perspective, innovative ideas and the vigor to propel the CME Group to the next level.
As a CME member, I’m very concerned that equity value and trading rights have gone in diametrically opposed directions over the last decade. When volume is up, as it has been, both should positively correlate as they reflect traders’ desire to access our markets. This relationship has completely broken down. We need outside viewpoints to drive shareholder value and identify new trading opportunities for our members.If elected as yourB-share director, I would work with management and the board to execute novel ideas outlined below, focusing on increased liquidity and new revenue streams for all equity owners. Each idea is independent of each other but as a whole would be awin-win for all CME stakeholders.*
Streamline Exchange Fees / Eliminate Byzantine Rules for Different Types of Customers
All CME product’s exchange fees should be binary — only Member andnon-Member rates. We should aim for exchange fees to be so simple that they fit on one page without the need of an accountant to decipher it.
Tokenize theB-Shares
Digitize and fractionalizeB-shares into hundredths of a membership. Let them trade freely on a blockchain where all transactions and ownership are recorded. Assess a 1% fee for the notional value of each membership transfer to be transferred nightly amongst all trading right owners of record. By dividing into tiny pieces, we should see the bid/ask spread to tighten significantly. We can provide superior liquidity toB-share owners; enable future owners to gradually buy into a membership over time; and create significant new revenue streams for our trading right owners.
Expand the Membership / One User per Membership / Enable Fractional Leasing
Multiply the 625B-1, 813B-2 and 1287B-3 shares by the same ratio used during demutualization, say 6/4/2, to create nearly 9600 New_CME_Tokens. Then return to a system of one user per New_CME_Token and eliminate all 106 and electronic corporate structures. Additionally, allow New_CME_Tokens to be leased in whole or fractionally. This could unlock trading right value & create better leasing opportunities; free up capital better employed by large users for trading CME products; and everyone benefits with increased trading volume.
Environmental, Social and Governance (ESG) / Crypto-Mining / New Technologies
Some of our largest investors, i.e. BlackRock, are shifting investments to companies focused on creating value for all their stakeholders. The CME Group needs to get in front of this trend by building solar/wind/hydro energy plants to power our global operations. Then divert the excess energy to mine Bitcoin and other crypto currencies. While this seems outside of our core competencies, I’d argue this is our business: we, like the miners, match and clear trades. We’d immediately converted any newly minted crypto into fiat. Thenet-net is another new revenue stream for shareholders; deep knowledge in new technologies changing the global exchange landscape for the CME; and increased allocation toESG-focused businesses by investors. That’s awin-win-win.
The current board has done an excellent job of getting theA-share price to over $200, but how will it double or triple from here? From where are the new ideas going to come? I hope you find these opportunities as exciting as I do.It’s time for fresh, young blood to revitalize the board and spark new innovation. I accept that challenge! OurB-shares are very valuable and I will work hard to unlock their true worth. Please get all our fellow members to exercise their right to vote!
Respectfully,
Dante Federighi
* These proposals have not been vetted by CME management. Some may not be feasible as they could infringe on Core Rights. The purpose of this presentation is for thought provoking discussion of all the opportunities available to the CME.