CBOE threatens to leave Illinois, echoes CME’s tax complaint
BY DAVID ROEDER AND FRAN SPIELMAN Staff Reporters June 9, 2011 8:26PM
A CBOE spokesman said in a statement that "economic realities" could force a move, althought it prefers to stay in Illinois. | Sun-Times Media file
Updated: May 9, 2012 9:33AM
It’s becoming a habit around here — another day, another stalwart of financial services in Chicago threatening to leave town.
On Thursday, it was the Chicago Board Options Exchange suggesting that higher corporate taxes in Illinois could cause it to take jobs out of state. The CBOE’s warning came a day after CME Group Inc. said the same thing. CME owns the Chicago Mercantile Exchange and the Chicago Board of Trade.
The options market, with its headquarters and trading floor at 400 S. La Salle, employs about 580 people, not including traders who use its facilities.
A CBOE spokesman said in a statement that “economic realities” could force a move, although it prefers to stay put.
“Our industry has become increasingly electronic and, if the environment becomes too unfavorable, business into our exchanges can be easily redirected to competitors in other cities through the flip of a switch,” the statement said.
Since June 2010, the CBOE has been a publicly traded company. It operates a separate, strictly electronic options exchange called C2 that is based in Secaucus, N.J.
The main cause of the avowed wanderlust is January’s increase in the corporate income tax rate in Illinois. The rate grew to 9.5 percent from 7.3 percent.
Terrence Duffy, chairman of CME Group, said Wednesday the higher rate is costing his company $50 million a year. Duffy also criticized the state for maintaining tax loopholes that grant favors to a few companies at the expense of others.
Data from Gov. Pat Quinn’s office showed that in the last year, it has negotiated tax incentives for 48 companies that have promised to create or retain jobs. The largest deal was the most recent, a package exceeding $113 million for Motorola Mobility Inc. to keep 2,500 people working in Libertyville.
Mayor Rahm Emanuel, a former CME board member, said he discussed the company’s concerns with its top executives. Emanuel declined to say if he will push their case for changes in state tax policy.
“I know their frustration. They acknowledge that the city has been great to them and the city is a place that they’ve prospered,” Emanuel said. “I also believe they believe that the city will continue to be a place where they can prosper.”