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CME Trust Invests in Futures of Youth

By Maggie Shea, HedgeWorld Staff Writer | Tuesday, December 12, 2006

CHICAGO (HedgeWorld.com)-The spirit of giving brightened an otherwise dreary, overcast Tuesday morning for attendees of the Dec. 12 Chicago Mercantile Exchange Trust breakfast, where trustees announced the first grant commitment of $10 million to various Chicago-based education and health initiatives.

Chicago Mayor Richard M. Daley, donning a festive holiday tie, spoke at the event, held in the CME Executive Conference Center, as well as four of the seven CME Trust members: Leo Melamed, chairman emeritus of the CME and director of the boards of CME and CME Holdings Inc.; James E. Oliff, vice chairman of the boards of CME and CME Holdings and director of CME; Howard J. Siegel, director of CME Holdings' board; and Jack Sandner, director of CME Holdings' board. Trustees Craig S. Donahue, chief executive of CME and CME Holdings; Terrence A. Duffy, chairman of the board of CME and CME Holdings; and William P. Miller II, director of CME Holdings and CME, could not attend.

Also at the breakfast were representatives from 20 universities, schools and non-profit organizations-the beneficiaries of CME Trust's grant commitments. Several students from the Nobel Charter School and the Perspectives Charter School, both part of the Renaissance Schools network and grant recipients of more than $1.1 million, attended as well.

"No part of the world gives like American business leaders," said Mr. Daley, addressing a room full of for-profit and non-profit executives alike. "Most places rely on government to give; here we rely on individual entrepreneurs." He added: "In our city, state, nation, world, there's a line drawn between the educated versus the uneducated, living in poverty."

The answer to weakening that divide?

Simple, he said. "Educate them. We don't need any more meetings or supports. Stand up. Be counted, and put money into education ... Basically prepare young people for a job." Mr. Daley also said the growing cost of higher education makes vocational job training ever-more important. "There's nothing wrong with getting a job after high school," he said.

The CME Trust was reconfigured in 2005 after decades of building up as a security bank intended for CME customers. Mr. Melamed established the CME Trust in 1969 as a way to offer public customers protection against losses at the hands of a CME member firm. "Years and years ago, when I was chair of the Merc, we had hopes for growing our markets, and wanted to give the community that uses our markets confidence that our market was strong," Mr. Melamed said. "So we created a trust-seeded with $5 million-which was a lot of money back then!"

As the CME grew and the security reached the billions with each passing year, not a single CME customer lost money due to a member's financial condition, Mr. Melamed added, sparking an idea among trustees to use that money for charitable causes. Thus, last year, the CME Trust received approval to distribute the trust's net income to public charities, and it selected as recipients the charities that align with the CME Trust's three-part mission to improve education, economic opportunity and health.

"One aspect of the trust is devotion ... to education in the financial markets," said Mr. Oliff. In a derivatives market exceeding $800 million, Mr. Oliff said that research predicts derivatives will double every three years: "The CME and Chicago markets will continue to play a role in that, and we have worked closely with universities to increase [knowledge of derivatives]. As we move forward and see the markets expand ... that thirst for knowledge never ends." Thus, he said, half of the grants will help fund Chicago-area universities' financial education programs.

Illinois university programs receiving funding are the Depaul University College of Commerce, Northwestern University's Kellogg School of Management, the University of Chicago Graduate School of Business, the University of Illinois at Chicago (for its International Futures and Options Center), and the University of Illinois at Urbana-Champaign College of Business.

The second mission of the CME Trust is to promote the education of disadvantaged children and youth, and CME Trust will donate a combined total of more than $2 million toward support for children's education. Beneficiaries include After School Matters, an organization that offers programs to help prepare young people for productive futures; Big Shoulders Fund, a grant provider to Chicago Catholic schools; Cabrini Connections, a tutoring and mentoring program; the Great Books Foundation; the Milton and Rose D. Friedman Foundation, which supports school choice programs in Illinois; Renaissance Schools Fund-Noble Charter and Perspectives Charter are part of the Renaissance Schools network; and the Youth Services of Glenview, Northbrook and Northfield, Il.

The third mission is to promote the health and well-being of children. CME Trust has around $2.4 million committed to children's healthcare initiatives, including the Children's Memorial Hospital; Jewish Family and Child Services; Lawndale Christian Health Center; Metropolis 2020, a coalition promoting quality childcare and education; the Ounce of Prevention Fund, a service, care and education provider for poor communities; Rush University Medical Center; and Women's Business Development Center, supporting women launching and expanding businesses and their families; and the Mercy Home for Boys and Girls.

"We are investing-note how I say investing-in these premier charitable organizations because it is cost-effective to promote the well-being of children" so they are successful as adults, said Mr. Siegel. He then quoted Irving Harris, the Chicago philanthropist who died in 2004: "The first few months of a child's life are not a rehearsal-they are the real show."

"This trust will be longstanding, independent, run by the seven trustees and [CME Trust Executive Director] Kassie Davis," Mr. Melamed said. "In the years to come, we expect to continue to do great work."

In keeping with the morning's theme of education, the Nobel and Perspectives students as well as the other guests were invited to tour the CME after breakfast.