CBOE telling would-be suitors to wait: CEO

By Paritosh Bansal

NEW YORK (Reuters) - The Chicago Board Options Exchange, the largest U.S. options market, has been approached by potential suitors, but is telling them to wait until an ownership dispute is resolved, Chief Executive William Brodsky said on Tuesday.

The CBOE has been approached by major domestic and international exchanges, but is holding off to get a higher price and to avoid the complications that would come with striking a deal while a dispute over trading privileges is being litigated, Brodsky said at the Reuters Exchanges and Trading Summit.

The CBOE could be an attractive acquisition target at a time when many stock exchanges are seeking to boost margins by expanding into other asset classes, particularly options.

"Many people have come to us because it is obvious that we are the stand-alone options exchange, and we have a very attractive business model," Brodsky said. "We have suggested that we are better off getting the litigation behind us."

Asked if rather than a "for sale" sign up, the company's message was "buyers welcome to talk," Brodsky said, "No, we don't need to. It's a small universe of potential players out there."

"We have a host of possibilities, but we are just not ready to have that conversation," Brodsky said. "There is no discussion. And there won't be any until we move further down the demutualization path."

The dispute, which stems from trading rights under a decades-old agreement, has stymied CBOE's efforts to transform itself from a member-owned organization into a shareholder company, which could pave the way for an eventual initial public offering or a merger with another exchange.

The rights at issue date back to 1973, when the CBOE was created by the Chicago Board of Trade. Under rules, CBOT full members were allowed to trade options at the neighboring CBOE without having to buy a separate membership.  Continued...