Today, the Chicago Board Options Exchange (CBOE) announced the following:
Exercise Right Eligibility Terminates
On January 15, 2008, the Securities and Exchange Commission (SEC) unanimously approved CBOE's rule interpretation that no person qualifies to become or remain a CBOE exerciser member following the July 2007 acquisition of the Chicago Board of Trade (CBOT) by Chicago Mercantile Exchange Holdings, Inc. (CME).
CBOE to Seek Dismissal of Delaware Litigation
Based on the SEC's approval order and the SEC's exclusive jurisdiction over membership issues, CBOE will seek dismissal of the exercise right litigation in Delaware on the grounds that no state law claims survive the SEC's approval order and that former exerciser members would not be entitled to participate in CBOE's demutualization.
"We are extremely pleased by the SEC's approval of CBOE's position regarding exercise right eligibility, which should dispose of the claims in the class action in Delaware court. CBOE applauds the Commission for addressing the exercise right issues with certainty, clarity, and specificity. We are especially gratified that the order specifically confirms our legal position regarding the impact on exercise right eligibility of the acquisition of CBOT by CME. We believe this places us in a very strong position to achieve a favorable resolution of this matter, once and for all, in Delaware court," said CBOE Chairman and CEO William J. Brodsky.
In its order, the SEC finds that CBOE's proposal "interprets CBOE's rules fairly and reasonably" in light of the CME acquisition of CBOT and that the rule interpretation is consistent with the requirements of the Exchange Act, the SEC's rules, and CBOE's own rules, including the provision of its charter that created the exercise right. In particular, the SEC approved CBOE's interpretation that former CBOT members, after the CME acquisition, no longer qualify as CBOT members within the meaning of that charter provision.
CBOE is currently developing a new access plan that will address present temporary CBOE members who are former exerciser members. Those temporary members will continue in their present status until the new plan is approved.
CBOE, the largest options exchange in the U.S. and creator of listed options, is regulated by the Securities and Exchange Commission (SEC). For additional information about the CBOE and its products, access the CBOE website at: www.cboe.com.