CHICAGO — The Chicago Board Options Exchange registered its demutualization plan with the SEC on Feb. 12. Exchange officials said demutualization will allow it to seek mergers or joint ventures, access capital markets and possibly go public.
As part of the CBOE's move from a member-owned entity to one owned by shareholders, the exchange created CBOE Holdings Inc., which will eventually become the parent of the CBOE and the upcoming CBOE Stock Exchange. CBOE Holdings will also own the CBOE Futures Exchange, market data and technology units, a 24% stake in the OneChicago futures exchange and a 17.6% stake in HedgeStreet, an Internet-based derivatives market.
Also, the SEC is accepting comments on a CBOE filing seeking to terminate Chicago Board of Trade members' exercise rights once the CBOT-Chicago Mercantile Exchange merger closes. Board of Trade members helped create the CBOE in 1973, and as a result, 1,402 CBOT members received an "exercise right" to become a CBOE member without having to purchase a separate CBOE membership.
The CBOE and the CBOT disagree on whether these exercise rights should continue now that the CBOT and the CME have demutualized and gone public, while the CBOE is in the process of demutualizing. Also, the CME and the CBOT have agreed to a merger, which is expected to close this summer.
"From its very inception, the exercise right was tied to the continued ownership of a CBOT membership," the CBOE said in its filing, noting that the Chicago Mercantile Exchange Holdings Inc. will be "the surviving corporation" and "the parent company of CBOT."
The CBOT, which is suing the CBOE in a Delaware court to protect its members' exercise rights, said in a statement that the CBOE's filing was "an effort by the CBOE to circumvent the jurisdiction of the Delaware courts." Craig Donohue, CME chief executive officer, said last week that the litigation between the CBOE and the CBOT will not affect the proposed merger.
The SEC is accepting comments through Feb. 27.