CBOT settles ownership dispute

The Chicago Board of Trade has agreed to settle a lawsuit over minority members’ ownership rights, paving the way for proposed restructuring of the US futures exchange into a for-profit company.

The settlement has still to be approved by an Illinois judge, but lawyers acting for some of the minority members said they were happy with the deal and expected it to go through.

The CBOT’s 2,200 minority members will now between them get just over 22% of the equity ownership of the restructured CBOT, nearly twice the 12% they were allocated by the board when the restructuring plans were drawn up in 2000. The other 78% will be divided among the 1,400 full members.

The original lawsuit against the CBOT was dismissed, but that decision was overturned by another court last July, and yesterday’s action by the board represented the culmination of “intensive discussions”, the CBOT said yesterday.

The deal comes as Swiss-German company Eurex finalises its plans to launch a rival futures exchange in the US this year. The demutualisation of the CBOT also removes any obstacle to a takeover attempt by the Chicago Mercantile Exchange, which is widely anticipated by many commentators.

One change thought to be included in the restructuring is for full members to be allowed to sell their right to trade at the Chicago Board Options Exchange, which the CBOT set up in 1973.