Chicago exchanges reach billion dollar settlement
CME, the world’s largest derivates exchange and owner of the Chicago Board of Trade (CBOT), has agreed to a $1 billion settlement with the Chicago Board Options Exchange (CBOE).
The two exchanges have been feuding over how CBOT members should be compensated for their ownership stake in the CBOE. In 1973, the CBOE was established as a member-owned exchange and its member-owners were also CBOT members. The CBOE has been pushing to reorganize as a publicly traded corporation, which would eliminate members and thus expand the number of potential owners.
Terms of the settlement include $300 million for CBOT members in addition to an 18% ownership stake in the new exchange.
The settlement will allow the CBOE to follow in the footsteps of member-turned-public owned exchanges such as NYMEX and NYSE Euronext. Both of these exchange stocks have been punished in 2008, could the momentum of derivatives trading help the CBOE fair better?
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