The CBOE kicked off its first day as a publicly traded company on the NASDAQ with a remote bell-ringing ceremony from the CBOE trading floor in Chicago. (AP Photo/Chicago Board Options Exchange, David Banks)
Associated Press | Shares of CBOE Holdings Inc., the last major U.S. exchange to go public, jumped in their trading debut, logging a double-digit first-day gain.
In the current market, wherein numerous initial public offerings have been postponed or canceled, CBOE was a success. Volatile stock markets and a tentative economic recovery have made investors wary of riskier investments. Half the companies that have gone public this year have priced below expectations, the highest proportion since at least 1999.
CBOE’s shares priced at top of the range that the company and its underwriters were targeting. The shares opened at $32.80, 13 percent above their offering price of $29, and continued to climb. The stock, trading on the Nasdaq Stock Market under the symbol “CBOE,” soared $4.20, or 14.5 percent, to $33.20 in afternoon trading.
But compared to other exchanges that have gone public in recent years, the offering wasn’t as impressive. New York Mercantile Exchange’s stock more than doubled on its first day of trading in 2006. Intercontinental Exchange Inc. shares rose 51 percent, and Chicago Board of Trade Holdings Inc. shares rose 49 percent when they debuted in 2005. CME Group Inc.’s stock rose 23 percent in its IPO debut in 2002. CBOT and NYMEX are now part of CME Group.
“In a better environment [CBOE] would have done better,” said Scott Sweet, who owns research firm IPO Boutique. The exchange “had the goods.”
Still, the fact that a well-known, profitable company with a brand name offered shares and did well may prompt other high-profile companies looking to raise money through IPOs to step forward.
Electric car maker Tesla Motors Inc., which has a partnership with Toyota Motors Corp., set terms for an IPO Tuesday and plans to go public in the last week of June. CBOE’s strong debut could motivate others like hospital chain giant HCA Inc. and toy retailers Toys R Us Inc. to set a trading date soon, said Josef Schuster of IPOX Capital Management. The smaller companies that have traditionally used the IPO market for funding to expand will continue to have problems, he said.
One of the great things about CBOE (or any options exchange) is that it does well if the stock market moves significantly in either direction. Some of the worst days for the stock market are great days for CBOE.
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