The Chicago Board Options Exchange (CBOE) has purchased 68 CBOE exercise rights held by Chicago Board of Trade (CBOT) Full Members for $100,000 each.
All tender offers were accepted and represent approximately 5% of the total number of CBOT Full Members’ exercise right privileges. Since CBOE’s inception in 1973, the exercise right has entitled each of the 1,402 Full Members of the Chicago Board of Trade to become members of CBOE without having to acquire a separate CBOE membership.
The purchase was executed through a modified Dutch Auction process that had a price range of $60,000 to $100,000 for each “exercise right privilege,” which is a transferable interest representing the CBOE exercise right component of a CBOT Full Membership. CBOT Full Members who chose to sell their exercise right were able to offer to sell their exercise right privilege for any price within that range. The 30-day offer period began on April 26, 2005, and concluded at 4:00 p.m. on Wednesday, May 25th. At the conclusion of the offer period, CBOE determined both the clearing price in the auction and the number of exercise right privileges it would purchase. All CBOT members who tendered their exercise right privileges at or below the clearing price received the same $100,000 price for their exercise right privileges.
CBOE has announced it will establish a bid for $100,000 to purchase additional exercise right privileges from CBOT Full Members.