From Bloomberg via Yahoo Finance, September 18:
The letters are stamped all over the hallways of Chicago’s giant skyscrapers and grand office buildings. DRW, IMC, CME, Cboe.
These are some of the derivatives firms that collectively handle trillions of dollars a year in trades, greasing the wheels of global markets with everything from stock options to corn futures. Most of them have called Chicago home for decades — providing thousands of jobs within the city’s $75 billion finance industry.
Now, the firms’ commitment to the Windy City is being tested by some $800 million in taxes proposed by a new mayor staring down a budget gap that’s swelled to half a billion dollars. One idea is a levy on financial transactions, which has alarmed companies already worried about a jump in crime that shows few signs of abating.
Behind the scenes, market makers and exchanges are working together to press their case with policymakers, with firms that typically compete with each other sharing data to help explain their economic benefits to Chicago. While executives haven’t explicitly threatened to leave, in private conversations it’s clear they will consider quitting the city if crime remains an issue and the financial transaction tax passes.
“We don’t want to leave,” said Ed Tilly, the chief executive officer of Cboe Global Markets Inc., the firm behind Wall Street’s so-called “fear gauge,” the VIX. “But we cannot be in a position where we are disadvantaged in the most competitive markets in the world, where our competitors don’t face the same economics that we would.”
The city is in a tough spot. Officials are projecting a $538 million budget deficit next year, with spending pressured by inflation and a surge in asylum seekers who have arrived in Chicago with no money or means of support.
The derivatives industry, home to some of the most profitable businesses in the city, is a tempting target to plug that gap. Just CME Group Inc. and Cboe, the two firms that are publicly traded, had combined adjusted income of more than $3.6 billion last year....
....MUCH MORE, they go deep.
As noted in the outro from a Saturday post:
In October 2021 we saw:....If you recall, members of the Mayor's transition team publish their plan of action upon taking office three months ago:
First We Get The MoneyIt's been removed from the website it was hosted on but the Internet Archive has it.
As a very droll mentor once told me after a minor catastrophe: "It's good to have a plan."
HedgeMonster Citadel Talking Of Leaving Chicago As The City Goes Medieval
And the outro from a September 2022 post:
...Chicago entered a financial death spiral a few years ago where the politicians promised the public sector unions so much in pay/health care and pensions, in return for votes, that there is no way to pay the bills. As the highly taxed, both corporations and real persons, realized this, and the social problems that most American city governments have fostered, the highly taxed took their money and left, speeding up the day of reckoning.
I hate shorting interest-paying debt so selling the municipal bonds isn't as attractive as it could be—where are muni strips when you need them?—but a quick look to see if any of the monoline insurers were stupid enough to guarantee principal and interest on Chicago paper might prove remunerative.
