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CBOE Members Approve Purchase Offer For CBOT Exercise Rights

Date 20/04/2004

The Chicago Board Options Exchange membership yesterday voted in favor of a proposal to initiate a purchase offer for a significant number of Chicago Board of Trade (CBOT) exercise rights. The CBOE Board of Directors approved the proposal in March 2004.

The proposal, approved by a margin of 408 in favor, 346 opposed and 2 abstentions, calls for CBOE to offer to purchase up to 500 exercise rights from CBOT Full Members for $100,000 each.

"Our membership's approval to make a purchase offer for CBOT exercise rights is an investment in the future of CBOE. The exercise right impacts CBOE and CBOT in ways never contemplated when it was formed 31 years ago at CBOE's inception. Today, when our respective marketplaces demand the utmost in agility and flexibility, it is crucial that we begin the process to reduce the overall number of CBOT exercise rights at CBOE. The purchase offer approved today represents an important step toward increasing the autonomy of both institutions," said CBOE Chairman and CEO William J. Brodsky.

"This vote opens the door to opportunities for CBOE as well as CBOT members. The purchase of exercise rights from those who want to sell them will give CBOE's regular members a greater interest in CBOE and more control over its activities, while giving CBOT members the ability to monetize the value of their asset," said CBOE Vice Chairman Ed Tilly.

Since CBOE's inception in 1973, the exercise right has entitled each of the 1,402 Full Members of the Chicago Board of Trade become members of CBOE without having to acquire a separate CBOE membership. In December 2003 CBOE and CBOT entered into an agreement that set the stage for CBOE to make an offer to purchase transferable exercise rights, and in February 2004 the CBOT membership approved several rule changes to allow the transfer of exercise rights. CBOE's offer to purchase exercise rights remains subject to Securities and Exchange Commission (SEC) approval of the interpretation of the exercise right embodied in the December, 2003 agreement.

CBOE, the founder and creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, visit the CBOE website at http://www.cboe.com