What is the main reason for this 8-K filing?

This 8-K filing announces a temporary and limited exception to CME Group's policy prohibiting speculative transactions in company securities. This exception allows certain Board members, who are involved in a class-action settlement with the Chicago Board Options Exchange (CBOE), to hedge their personal holdings of CME Group Class A common stock.

Who is eligible for this hedging exception?

The exception is limited to Board members who are considered potential class participants in the settlement of a class-action lawsuit against the CBOE. To qualify, they must own one Class B-1 membership, one ERP, and a minimum of 10,251.75 shares of CME Group's Class A common stock.

Are there any restrictions on the hedging activity?

Yes, several restrictions apply. Board members can only hedge shares held in excess of 5,000 Class A common shares. All hedging transactions must be pre-approved by CME Group's General Counsel and can only occur during periods when no blackout period is in effect. The exemption also expires upon the final resolution of the CBOE litigation.

What is the purpose of the exception?

The exception is intended to allow Board members who hold significant CME Group stock to mitigate potential financial risks associated with that investment, given their participation in a settlement involving the CBOE. This is deemed necessary because they must hold a minimum number of shares to qualify for the settlement, and holding such a substantial amount could otherwise be considered a speculative position under the company's general policy.

CME 8-K: Corporate Changes

Summary

CME Group Inc. (CME) filed an 8-K on June 9, 2008, detailing a limited exception granted to certain Board members regarding the company's insider trading policy. This exception allows specific Board members, who are potential participants in a class-action settlement with the Chicago Board Options Exchange (CBOE), to hedge their CME Group Class A common stock holdings that exceed 5,000 shares. This decision was made by the Governance Committee and approved by the Board of Directors on June 5, 2008, in response to the settlement agreement announced on June 2, 2008. The exemption is narrowly tailored, applying only to Board members meeting specific criteria related to the CBOE litigation and requiring pre-approval from the General Counsel. The primary purpose is to allow these individuals to mitigate potential risks associated with their significant investments in CME Group stock, which are held to qualify for the settlement. The exemption is temporary and will expire upon the final resolution of the CBOE litigation.

Key Highlights

1CME Group granted a limited exception to its insider trading policy for certain Board members.
2The exception allows hedging of CME Group Class A common stock holdings exceeding 5,000 shares.
3This exception is specifically for Board members who are potential participants in a settlement related to litigation against the Chicago Board Options Exchange (CBOE).
4The litigation involves a class action concerning the 'exercise right privilege' (ERP) and its connection to CBOE memberships and CME Group Class A common stock.
5Hedging transactions require pre-approval from CME Group's General Counsel.
6The exemption is temporary and will expire upon the final, non-appealable resolution of the CBOE litigation.
7The policy generally prohibits short selling and speculative transactions in the company's securities by employees and Board members.

CME GROUP INC. 8-K Report, Code of Ethics Amendment (Jun 9, 2008)

Summary

Key Highlights

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