"We don’t want to leave... But we cannot be disadvantaged in the world's most competitive markets," Tilly said in light of an $800 million tax proposal from Mayor Brandon Johnson aimed at plugging a $538 million budget deficit projected for next year, and increasing costs driven by a cocktail of inflation and rising numbers of destitute asylum seekers.
Now, CME Group, Inc. - which has over a century of history rooted in Chicago, is warning much the same. According to CEO Terry Duffy, they'll cut bait and drop Chicago like a hot stone - and in fact, have begun the process of uncoupling from the dysfunctional city.
"I liquidated every piece of real estate in the state," Duffy said in an interview last week, according to Bloomberg. "I have leases where I am in an advantageous position, because now I can renegotiate. They’re all coming due. We like Chicago. There’s no reason for us to want to leave. But at the same time, if the atmosphere gets to the point where it’s intolerable, we have no choice."
His commitment to Chicago is being tested as stubbornly high crime rates and a slew of taxes — including a financial-transaction levy proposed by Mayor Brandon Johnson — have him considering his options. Illinois Governor JB Pritzker has already said he opposes the tax proposal, but he won’t be at the helm forever, Duffy said.
As for the mayor, Duffy said he’s met with Johnson once since he was elected in April and is willing to throw his arms around him to help him succeed. But “we don’t agree on anything,” Duffy said.
Below is a summary of an interview Duffy gave on the subject:
Challenges in Chicago:
- Duffy underscores the difficulties in Chicago, highlighting the absence of commerce and the potential financial pitfalls of vacant buildings.
- He emphasizes the crucial need to strategize bringing people back into cities and reviving societal norms and operations.
"You can’t walk outside and not have commerce in one of the largest cities in the world. Who’s going to pay the taxes on these large buildings that are now vacant? You need to figure out ways to get people back into the cities."
- Duffy expresses his inclination to alter tax approaches, proposing the elimination of sales tax in physical stores to better compete with online platforms.
"Let people not pay a sales tax and compete with online. If you want to sell it online then you pay a tax, and in the store where you’re employing people, you don’t pay a tax."
Potential Move to Texas?
- Despite Texas Governor Greg Abbott extolling the benefits of firms moving to Texas, Duffy remains non-committal, acknowledging the pros without indicating any solid intent to relocate.
"I have a lot of clients in Texas. I like working with my clients that come out of Texas. That was the end of my conversation. He didn’t offer me anything. I didn’t ask for anything either."
- Duffy sheds light on CME’s sound financial standing and its strategic approach to acquisitions, emphasizing safeguarding shareholders' interests.
"I am a triple A-rated institution with very little debt. I get shopped a lot of deals. We have the capacity if we thought it was right to do it. We run the firm for the benefit of the long-term. So when it comes to acquisitions, I would never do anything that I didn’t think was in the best interest of my shareholders."
Dismay over FTX’s Collapse:
- Contrary to feeling vindicated by FTX’s collapse, Duffy expresses disappointment, acknowledging the potential of cryptocurrencies to eliminate or reduce friction in the financial system.
"I feel depressed by it. We’ve got to evolve and change, and crypto could be a vehicle to help eliminate friction. Whether it will or not, I don’t know. I don’t want to see anything be eliminated from the possibilities of making the world a better place tomorrow."
FTX's Proposals and Regulatory Vision:
- He maintains that FTX’s proposals held merit and insists on the establishment of comprehensive regulatory frameworks around such innovative concepts.
"I never said any of the proposals did not have merit. I just said let’s write some rules around it. And I believe that today.
"I still see potential that it could be another way to eliminate friction. Right now, I think the best system is the Futures Commission Merchants, but I don’t know if that’s going to be there forever."
Cautious Technological Deployment:
- Adopting a cautious perspective on technological implementations, Duffy is particularly reserved about deploying Artificial Intelligence (AI) in market operations.
"You don’t want to be last and you don’t want to be first. You’ve got to be really careful how you roll this stuff out."
Duffy’s Future at CME:
- With a contract that expires in a year and a half, Duffy’s future at CME is yet to be decided, with deliberations with the board planned for the upcoming year.
"I have another year and a half left in my contract. I will discuss with my board what they want to do sometime early next year and go from there."
Let's see where CME is a year from now...