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CBOE prepares to demutualise after settling suit

01 December 2009  |  5970 views  |  0 chicago Skyline

The Chicago Board Options Exchange (CBOE) has settled a long-running legal dispute with members of the Chicago Board of Trade (Cbot), paving the way for demutualisation within "days or weeks".

The US's biggest options exchange has been engaged in a three year legal battle with Cbot members who claimed they were entitled to a share of the CBOE should it demutualise, having created it in 1973.

The CBOE rejected the claim on the grounds Cbot was bought by the CME in 2007 but last year a settlement was reached giving disenfranchised members an 18% equity stake and $300 million in cash.

Some members held out but, in a statement, the CBOE says a settlement has now been reached that will see it pay $4.17 million, with the CME reimbursing half of this.

The CBOE says it believes the appeals would have failed but that settlement "would eliminate all remaining litigation impediments to demutualisation within days or weeks".

The move paves the way for an initial public offering or merger, with CME and Nyse Euronext both touted as possible bidders.

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