CHICAGO CME Group Inc (CME.O), the biggest operator of U.S. futures exchanges, may pay out its special dividend early to avoid a bite from higher taxes likely next year, a top exchange official said on Wednesday.
"We'll be going to our board in December, to talk about potentially pulling that payment into December to avoid some of the tax uncertainty for receivers of that dividend," CME Chief Financial Officer James Parisi told analysts at a conference sponsored by KBW.
Several companies, including Costco Wholesale Corp (COST.O) and casino developer Las Vegas Sands Corp (LVS.N), have declared one-time cash dividends in recent days ahead of a likely increase in the dividend tax rate unless Congress and the White House reach an agreement on a new deficit-cutting plan.
Without action from lawmakers, the dividend tax rate will rise to as high as 39.6 percent for the wealthiest Americans, from 15 percent now.
CME usually issues an annual dividend in February or March, Parisi said.
Parisi also said CME is poised to capitalize on regulatory changes that as early as next March will force a large swath of the over-the-counter swaps market into clearinghouses such as those that CME runs in the United States and London.
Last week, CME won approval as a swaps data repository, a designation that allows it to capture and report data from its swaps customers. Without the designation, CME would have had to send its customers' data to a rival's repository.
"I look at it too as a way to help attract and maintain customers in that over-the-counter space and make their experience that much better," Parisi said.
CME will waive fees for the repository through next September, he said, but could win new revenue by clearing swaps and handling more futures as customers turn to those contracts and away from what will be more capitally intensive over-the-counter derivatives.
CME recently increased its clearinghouse line of credit to $5 billion from $3 billion, to increase liquidity as a backstop against any possible default ahead of the swaps rule changes and the expected increase in OTC clearing business.
(Editing by Gerald E. McCormick and Matthew Lewis)