NEW YORK (Reuters) - The Chicago Board Options Exchange said on Tuesday it is preparing a prospectus on its plan to convert to for-profit status, which is expected to be submitted to the U.S. Securities and Exchange Commission within the next few weeks.
"My goal is to demutualize," said CBOE Chairman and Chief Executive William Brodsky, speaking at the Reuters Exchanges and Trading Summit in New York. "We are hoping to file the S-4 with the SEC within the next six to eight weeks."
The CBOE, the largest U.S. options exchange, is in the process of converting into a for-profit stock entity from a member-owned organization this year.
Many financial markets have transformed to for-profit enterprises from their traditional member-owned, collective models. As they make that change, several have gone public, giving them flexibility to access capital for investments in technology or acquisitions.
But Brodsky said it was too early to consider an initial public offering until CBOE's for-profit transformation was completed. "You can't go public until you demutualize," he said.
One hurdle the CBOE has to overcome first is to resolve the joint membership issue with the neighboring Chicago Board of Trade BOT.N. The CBOT, the No. 2 U.S. futures exchange, held an initial public offering in October 2005.
"We are somewhat tied to them and they are tied to us," Brodsky said, referring to a significant number of memberships that overlap between the two exchanges.
CBOE last year held an auction in an attempt to repurchase trading rights held by full CBOT members in which about 69 exercise right privileges were bought.
The rights, created when CBOT spun off the options exchange in 1973, give each of the 1,402 full members of the CBOT the right to trade at the CBOE, without having to acquire a separate CBOE membership. The CBOE has 931 members. Continued...
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