The PCX demutualization proposal requires approval by both the SEC and the California Department of Corporations. When it is effective, Pacific Exchange seat owners will receive 1,000 shares of common stock in PCX Holdings, Inc., a new entity, for each seat owned. PCX Holdings will own the Pacific Exchange and its subsidiary, PCX Equities, Inc., a for-profit corporation established in 2001 when the Exchange demutualized its equities business. The Pacific Exchange will continue operating the options business; PCX Equities will remain the regulator of the Archipelago Exchange (ArcaEx). PCX seat owners will also receive non-transferable trading rights as part of the transaction. The seat owners overwhelmingly voted in favor of the proposal on January 22, 2004, by a vote of 443 to 51 (90 percent in favor).
"We are pleased that the SEC is moving our proposal forward so quickly," said Philip D. DeFeo, PCX Chairman and CEO. "Demutualization is critical to our competitive position in the marketplace. It makes the Exchange more attractive as a strategic partner and investment opportunity. It allows us to make decisions and implement change faster. It aligns the interests of shareholders and management, and positions us to compete in a world where all exchanges will soon be demutualized entities."
The California Department of Corporations will hold a public hearing on the "fairness" of the PCX proposal on date to be determined. Public notice of the fairness hearing will be given at the time it is set by the Department.
