Futures market first in U.S. to go public

By Bruce Blythe
Bloomberg News Service

Trader Anastasia Georgianas signals a transaction yesterday in the S&P futures pit at the Chicago Mercantile Exchange. The futures market will soon be publicly traded itself. Bloomberg News Service

Chicago Mercantile Exchange Holdings Inc., parent of the 104-year-old market, filed with the U.S. Securities and Exchange Commission to sell shares with a maximum value of $150 million.

The exchange, which trades stock-index and Eurodollar-based contracts as well as livestock futures, has joined other markets in converting to for-profit businesses from member ownership to compete more efficiently with online trading networks.

The exchange said it intends to use proceeds from the offering for development of technology and other capital expenditures and "may use a portion of the proceeds to acquire or invest in businesses, technologies, products or services."

"No specific acquisitions are planned and no portion of the net proceeds has been allocated for any acquisition," the exchange said.

Publicly traded stock exchanges are common outside of the United States, and include the London Stock Exchange and the Deutsche Boerse AG. The Nasdaq Stock Market, the second-biggest U.S. equity market, is planning a share sale later this year or in 2003.

The Chicago Mercantile Exchange issued common stock to its members, officers and directors when it became a for-profit business in November 2000. There were 28.8 million shares outstanding on March 31, the exchange said in the filing.

Morgan Stanley Dean Witter & Co. will manage the sale, along with UBS Warburg LLC, the exchange said.

Among the contracts traded on the exchange are futures contracts based on the Standard & Poor's 500 stock index. The exchange said risk factors for the offering include the possibility that electronic trading might divert business as customers shun open-outcry trading, which accounts for more than half its revenue.