Sunday, October 31, 2010

Exchange membership vs. Taxi medallion

 picture from

An illustrative comparison between memberships at the Chicago Mercantile Exhcange and Chicago Taxi medallions.  For ease, the comparisons listed are between a full CME B-1 membership which allows trading in any pit, member margin rates and the lowest member fee rates in any legacy CME products.  The CME B-1 membership is the highest priced membership at the CME Group by almost double the cost of other memberships.

CME B-1 last trade: $560,000
Chicago Taxi Medallion last sale: $182,000

Number of CME B-1s: 625
Number of Chicago Taxi Medallions outstanding: 6,726 (this is recent as of link but varies slightly upward)

Monthly lease cost of CME B-1s newest leases: $1850/month
Monthly lease cost of Chicago Taxi: $2000/month approximately from $500/week drivers tell me

Income for CME B-1 user: varies
Income for Chicago Taxi driver according to U of I survey: $4.38/hour

Granted there are other details which aren't touched upon but it's clear that stacked side by side, it would seem that more economic opportunity lies in a Chicago Taxi Medallion than a CME B-1 membership which is pretty sad.  I have a lot of reasons why the CME B-1 and other seats are lacking, mostly because of what I believe is a coordinated devaluation by the exchange management.  The pit is pretty much dead so this shouldn't be seen as a ode to that but the memberships are still important in the electronic market and ought to be valued higher.  A more accurate comparison would be between a CME B-3 (IOM) membership which trades closer to that of a medallion but the result is just as stark. 
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