WASHINGTON (DTN)--Chicago Mercantile Exchange Inc. shareholders approved Nov. 7 two proposals to reorganize the futures exchange into a holding company--a move that could pave the way for a possible initial public offering, according to Reuters.
More than 94% of the votes cast were for the plan, the CME said in a news release. In the reorganization, the futures exchange will become a wholly-owned subsidiary of Chicago Mercantile Exchange Holdings Inc., through a merger of CME into a new subsidiary.
"The merger will be completed upon the satisfaction of a number of conditions, including the receipt of a ruling from the Internal Revenue Service, and/or a formal opinion from legal counsel that the merger will be tax-free to shareholders," the release said.
The proposal already received the green light from the U.S. Securities and Exchange Commission on Oct. 1.
Shareholders cast their votes at a meeting on Wednesday or by mail. The exchange sent a proxy statement to shareholders in early October.
CME officials have not indicated when the world's second-largest futures exchange might pursue an IPO. However, some share transfer restrictions will be lifted Dec. 16, 2002, if the exchange does not have an IPO by then. If the exchange does close an IPO on or before Dec. 15, the first transfer restrictions would begin to expire 180 days after the IPO closes.
In a filing with the SEC, the exchange said that it has been told that transfer restrictions are imperative to an IPO.
"Our financial advisors have counseled us that extended transfer restrictions are critical to the success of an initial public offering, or IPO," the exchange wrote in its document filed on Oct. 1.
When the CME transformed last November from a member-owned exchange into a for-profit shareholder-owned entity, it converted its various memberships into more than 25.8 million Class A shares representing "pure" equity in the exchange. It also created Class B shares representing trading and membership rights plus embedded equity rights called Class A share equivalents.