Indiana Grain Company, LLC

Posted: 03/12/10

By: tomgrisafi

The last major private exchange left in the U.S., the Chicago Board Options Exchange, filed for an initial public offering of up to $300 million Thursday.

The CBOE plans to convert from a member-owned organization to a publicly traded corporation known as CBOE Holdings Inc.

The Chicago exchange, the largest platform for options trading in the U.S., did not say when it plans to go public or how many shares it hopes to sell. The CBOE has wanted to go public for a long time. It settled a dispute over payment for ownership with the CME Group Inc., which operates the Chicago Mercantile Exchange and the Chicago Board of Trade, in August 2008, clearing the way for an IPO.

"It's the last of the bigger, well-known exchanges" to go public, said Raymond James analyst Patrick O'Shaughnessy. Other popular exchanges, NYSE Euronext, Nasdaq OMX Group Inc., CME Group and IntercontinentalExchange Inc., are already public companies.

The CBOE is making its move after years of growth. Founded in 1973, the CBOE was the world's first marketplace for options.

The CBOE could be worth up to $5 billion if current members have to pay monthly fees to continue trading after it goes public, O'Shaughnessy said.

The company is also facing increasing competition from other exchanges. Its share of options traded in the U.S. fell to 31 percent last year from 45 percent in 2000.

CBOE says it wants to grow by launching C2, an all-electronic market, later this year and introducing more proprietary trading products such as the VIX.

It also hopes to capitalize on proposed regulation. The push for investors to move from unlisted, "over the counter" trading to more visible trading on exchanges could boost its business, CBOE said.

CBOE says it plans to pay a yearly dividend of 20 to 30 percent of adjusted income from the previous year.

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