CME wins IRS approval and sets date for demutualisation
09 November 2000 | 2115 views | 0
The Chicago Mercantile Exchange has won IRS Internal Revenue Service approval for its proposals to become a for-profit corporation. As a result, the Chicago futures exchange has set Monday, 13 November as the effective date for demutualisation.
The IRS ruling confirmed that conversion of CME memberships into shares of a for-profit corporation qualifies for tax-free treatment. The ruling satisfies the final condition for the "demutualisation" of the not-for-profit, membership-owned organisation.
The CME is expected to be the first major US exchange to convert its membership interests into equity interests that can be traded separately from exchange trading privileges. Like Liffe, its counterpart in the UK, the exchange is planning to develop its technology platform to deliver exchange-based infrastructures and services to a new generation of B2B marketplaces.
Exchange members voted to transform the 102-year-old institution into a shareholder-owned corporation in early June. The CME says the 98.3 percent favourable vote was the highest margin of approval in its history.