CBOE reveals plans for IPO

AP News
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Posted: Dec 10, 2009 5:03 PM

The Chicago Board Options Exchange said Thursday it plans to seek approval to change from a member-owned organization to a publicly traded stock company.

In a letter to CBOE members, the exchange said it plans to seek a member vote to demutualize and become a p09ublicly owned stock company at the same time it pursues an initial public offering of stock.

The letter said the goal is to complete demutualization and the IPO by the end of the second quarter of 2010.

All shares issued in the offering would be shares of common stock of CBOE Holdings Inc. Proceeds from the IPO would be used for general corporate purposes, including the repurchase of shares of the common stock issued to CBOE members in the demutualization and issued to those members of the settlement class who received stock under the settlement agreement.

A detailed timeline will be provided soon, said the letter, posted on the CBOE Web site and sent to members on Thursday.

Documents with further details are expected to be filed with the Securities and Exchange Commission at the end of the first quarter of 2010.

The board suspended trading on the exchange from 11:30 a.m. to 1:30 p.m. Thursday as it was distributing the notices of its plans to members.

In August, CBOE reached a settlement agreement with CME Group Inc., which operates the Chicago Mercantile Exchange and the Chicago Board of Trade.

The agreement cleared the way for the CBOE to become the third Chicago-based financial exchange to demutualize and go public _ a process that transforms it from a member-owned to a shareholder-owned corporation.

The dispute centered on how CBOT members should be compensated for their ownership of the CBOE options market they helped establish in 1973. The settlement will give CBOT members who hold exercise rights $300 million plus an 18 percent equity stake in the newly organized options exchange.

The settlement finalizes a tentative agreement that was reached in June.