The Chicago Board Options Exchange (CBOE), the first and one of the world's largest options exchanges, filed on Thursday with the SEC to raise up to $300 million in an initial public offering.
The exchange, which filed under the name CBOE Holdings, was founded in 1973 as the first organized marketplace for the trading of standardized, listed options on equity securities and is now the largest options exchange in the U.S. According to the S-1, the CBOE saw 1.13 billion options contracts traded in 2009 and boasts a 31% leading market share based on volume. The CBOE booked $426 million in sales last year, more than double the amount generated in 2005, and plans to use IPO proceeds for general corporate purposes, including tender offers for its outstanding Class A-1 and Class A-2 common stock.
Concurrently with its offering, the CBOE will convert from one of the few remaining member-owned exchange organizations to a share-based corporation. The demutualization process is subject to approval by the CBOE's 930 members.
Other exchanges to go public in the last decade include the New York Mercantile Exchange, the IntercontinentalExchange (ICE), the Chicago Board of Trade, the International Security Exchange and the Chicago Mercantile Exchange (CME). (The NYMEX, CBOT and CME are now components of the CME Group (CME).) These IPOs have exhibited notably strong performances, with the CME up 795% from its 2002 IPO price of $35 per share and the ICE up 329% from its 2005 IPO price of $26. The CBOT was up 300% from its 2005 IPO price of $54 when it was acquired in July of 2007. Some speculate that the CBOE's IPO may also open the door for a future potential buy-out by a larger company. The filing has been long awaited by those in the financial industry and was only recently made possible by the resolution of a legal dispute between the CBOE and the CME Group. Goldman Sachs is set to be the global coordinator on the deal, for which pricing terms and timing were not disclosed.
