While it continues to work diligently to build an electronic trading system, the Chicago Board Options Exchange (CBOE) is taking a wait-and-see approach toward demutualization.
Speaking at the recent futures and options expo held in Chicago, CBOE chairman Bill Brodsky said the CBOE will wait to see how demutualization shakes out at the Chicago Board of Trade-and other markets-before finalizing a for-profit conversion of its own. "We've decided as a policy matter to allow the demutualization activities of the Merc, the CBOT, the New York Stock Exchange and the NASD to play out, from the point of view of taxes and other issues ... while we attend to many of our own, more pressing points," he said.
The CBOT and CBOE, Brodsky explained, have a "unique" relationship that enables members of the CBOT to become members of the options exchange by just "walking inside" the CBOE and "filling out an application." Today, he noted, roughly 700 of the 1,402 members of the CBOT are also members of the Chicago options market. Therefore, he said, it makes sense to see what happens at the CBOT before the CBOE weighs in on demutualization.