The CFTC's approval comes the week after the June 6 vote in which exchange members overwhelmingly endorsed the for-profit plan of the CME with 98.3 percent approval. The CME, the first major U.S. exchange to hold such a vote, had submitted its proposed revisions to the CFTC before the membership vote.
"We are pleased that Chairman Rainer and the CFTC moved expeditiously to approve the rule changes we need to move forward and become for-profit," CME Chairman Scott Gordon said. "With one more piece of our plan in place, we look forward to moving quickly in a direction that will give us much more flexibility than we have had before."
"The CFTC's approval is critical to our moving forward," CME President and Chief Executive Officer Jim McNulty said. "We now await only a ruling from the Internal Revenue Service as the final step before we can complete the legal paperwork officially demutualizing the exchange."
The CME demutualization transaction is contingent on a favorable ruling by the Internal Revenue Service (IRS) regarding the tax consequences of the action-i.e., that memberships would be converted into shares on a tax-free basis. Once that ruling is received, all that will remain is the final preparation and filing of various corporate documents.
Two classes of shares in the new "Chicago Mercantile Exchange Inc." will be issued: Class A shares representing equity rights, and several series of Class B shares giving current members in the CME's various trading divisions equity and their respective trading rights in the new entity.
