Dow Jones Newswires | Seatholders of the Chicago Board Options Exchange on Friday approved a
plan to convert their memberships to shares in the company, clearing the
way for a long-planned public offering.

Member-owners’ backing of the deal, which will see CBOE Holdings Inc.
float an expected $300 million in shares on the Nasdaq Stock Market next
month, marks the last major step on a four-year road for the world’s
fourth-largest derivatives exchange by contract volume.

“Achieving this milestone has been a collective effort and, with this vote, CBOE members and staff may now look forward to writing the next great chapter in CBOE’s history,” CBOE Chief Executive William Brodsky said in a statement Friday.

CBOE seats, which trade on an open market, saw prices firm in the past week with the most recent membership changing hands for $2.35 million on Thursday.

Brodsky shepherded the CBOE through a lengthy legal battle over ownership rights in the exchange that ended with a settlement in December, freeing the company to file for the IPO in mid-March.

In the ensuing months CBOE management secured members’ support for the deal with a series of meetings and incentives, including a special dividend proposal payable following approval of the restructuring.

Seatholders on Friday voted 870 memberships in favor of a management-backed proposal to take CBOE Holdings public in a deal valuing the exchange operator at around $2.53 billion.

Thirty-four votes were cast against the plan, according to the company.

Approval of the transaction was expected, with many memberships held as investments by big firms like Caldwell Investment Management Ltd., which plans to sell some of its position while keeping the “vast majority,” according to company president, Brendan Caldwell.

“Such a resounding ‘yes’ vote is a vote of confidence in the management,” said Caldwell. “When we have management completely focused on making money at the CBOE, less on frivolous lawsuits and less on paperwork involved in doing an issue, I think the possibilities are tremendous.”

Tougher to win over were individual members, many of whom are former CBOE traders that had grown accustomed to the stream of income afforded by leasing out trading rights tied to the seats.

Members’ approval now gives CBOE management about a week to prepare before heading out on a road show — slated to begin June 1 — for the initial public offering. Shares bearing the ticker symbol CBOE are expected to begin trading June 15.

CBOE plans to sell 9.6 million shares in the offering, with selling stockholders adding another about 2.1 million, according to a regulatory filing this week.

The CBOE’s long trek toward demutualization saw the Chicago operator miss a round of exchange offerings and consolidation that saw many of its peers come together in the years leading up to the 2008 financial crisis.

While the CBOE’s dominant U.S. options franchise has prompted speculation that it makes an attractive acquisition target for a bigger exchange operator, others see a role for the CBOE as a consolidator.

“This simply marks the beginning of a new era in which the CBOE has the currency to potentially make acquisitions and grow in that manner,” said Burt Bondy, a former independent market-maker at the CBOE and a member since the mid-1970s.

CBOE, which also operates stock and futures platforms, enters the final days of its IPO push as its core options business stands ready to notch one of its busiest months in history following a record trading day May 6, when markets staggered sharply before clawing back some losses.

The CBOE has seen about 98 million contracts change hands so far in May, putting average daily trading volume at about 7 million contracts, ahead of the record 6.1 million daily average in September 2008.

The CBOE also has extended its lead over rivals this month, with its market share rising to 32.9%.