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12 Bus. Info. Alert 1 (2000)

handle is hein.journals/busiale12 and id is 1 raw text is: Exchange Demutualization: The View from the Library by Shonna Froebel ou have probably seen some of the headlines. Exchanges around the world are either consid- ering or are already engaged in for-profit ownership restructurings. The New York Stock Exchange (NYSE), Nasdaq, the Montreal Exchange (ME), the Chicago Board of Trade (CBOT), and the New York Mercantile Exchange (NYMEX) are all pondering demutualization (privatization). The Toronto Stock Exchange (TSE), the London Stock Exchange (LSE), and the Chicago Mercantile Exchange (CME) are currently engaged in the process. The Australian Stock Exchange (ASX), Amsterdam Exchanges (AEX), Stockholm Stock Exchange (SSE), Deutsche B6rse, and the London International Financial Futures Exchange (LIFFE) have completed demutualization. What is Demutualization? Demutualization can differ widely from exchange to exchange, but generally, it is the move from mutual asso- ciations owned by member firms to for-profit businesses with publicly traded shares, with a goal of improving cumbersome structures and allowing faster decision-mak- ing. In early November, the CME announced a detailed proposal to demutualize, which has been approved by its board. At the time this article was written the plan was still to be approved by members. CME's version of this process will result in two classes of shares: Class A, which is straight equity in the exchange; and Class B, which combines equity with trading rights. The plan includes a significant reduction in the size of the board (from 39 to 19 members), a streamlined committee structure, and the new position of chief executive. The LSE board has also approved a for-profit propos- al. The LSE is now engaged in putting a monetary value on the exchange, preparatory to structuring a deal to dis- tribute shares to current members. At the time this article was written, a board vote of the structured deal was expected to occur late in 1999. At the TSE, shares will be issued to each seat holder on the exchange with limits to the percentage of shares to ensure widely based ownership. Participating organiza- tions will sign contracts to access the trading system. There is a two-year moratorium on the trading of the shares. The size of board will not change, but its make-up will. Three non-member governors are being added, while continued on next page I In This Issue Exchange Demutualization: The View from the Library ........... 1 From the Editor ............... 2 Librarian-at-Large.............. 4 News & Trends ............... 5 New Sources ................. 7 Vendors ................... 12 Review Finder ............... 12

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