CBOT members, CBOE strike deal on ownership rights

CHICAGO (Reuters) - The Chicago Board Options Exchange said on Wednesday it has reached a definitive deal with CME Group's (CME.O) Chicago Board of Trade over who is entitled to participate in a lucrative legal settlement that was agreed to earlier this year.

The deal defines which CBOT full members qualify for an ownership stake in the largest U.S. options market, which needs a settlement in order to complete its restructuring into a for-profit company.

Once this happens, it would clear the way for the options market to eventually float shares to the public. Analysts widely expect CBOE to be an attractive acquisition prospect for larger world exchanges.

The deal was delayed the last couple weeks so that both parties could work out the terms of the tentative settlement announced on June 2, which calls for certain CBOT members to receive $300 million in cash and an 18 percent equity interest in CBOE.

The valuation of the settlement remains unchanged. But it now defines which CBOT class member is eligible to receive the CBOE equity portion or just the cash part of the agreement.

The proposal still requires approval from a simple majority of the 931 seats held by CBOE members and the Delaware Court of Chancery. A CBOE membership vote is slated for September 17.

The agreement would end CBOE's protracted legal dispute with certain members of the CBOT, now part of CME, the world's largest derivatives exchange.

Sources close to the negotiations told Reuters the definitive deal was delayed as those in charge of a class-action lawsuit tried to define the class of members who would be eligible to participate in the settlement.

The CBOT and some of its members sued the CBOE in 2006 in a Delaware court to retain so-called exercise rights at the options exchange. Those exercise rights would cease to exist upon approval of the settlement.

The trading rights date back to when the options exchange was spun off by the Chicago Board of Trade in 1973 and eligible CBOT members were allowed to trade options at the exchange without having to buy a membership.

The CBOE contends those rights were extinguished when CME Group bought CBOT last year.

(Reporting by Doris Frankel; Editing by Tom Hals)