Chicago Mercantile Exchange announced a plan to transform itself from...

Chicago Mercantile Exchange announced a plan to transform itself from a member-owned institution into a for-profit corporation. It is the first major financial exchange in the U.S. to announce such a plan. The plan calls for the conversion of membership interests into equity securities and aims to facilitate new business strategies and strategic relationships, and to improve and streamline the exchange’s management structure. Subject to a two-thirds approval vote by its members, the CME would become a Delaware for-profit stock corporation in which the members would own two classes of stock. A membership vote is expected to take place in the first quarter of 2000, with the transaction completed by the middle of the year. Members would receive Class B common stock representing their existing trading rights and privileges plus equity and shares of Class A common stock representing pure equity in the exchange. Under the plan, governance of the exchange will be greatly simplified. The existing 39-member board will be cut to a 19-member board after a two-year transition period. The new for-profit entity would be run by a president and CEO to be hired by the board. At the press conference, Mr. Oliff said a search for a president and CEO is already going on and a candidate has been identified. Negotiations with the candidate are now taking place.