The Chicago Board Options Exchange announced that its board of directors has endorsed a plan to convert to a for-profit company.

The board approved recommendations of its business model task force to begin the process of converting to a for-profit stock corporation.

Initial steps in CBOE’s transition toward a for-profit business model will begin in 2006 and will include a streamlined operating budget, and a reconstitution of the composition and functions of the governance and advisory committees to reflect those of a for-profit enterprise.

“The unprecedented levels of competition brought about by new competitors and new technologies require increased autonomy and agility in order for CBOE to maintain its leadership role. The decision by the CBOE board of directors recognizes that need, as well as CBOE’s ability to change and to compete,” said William Brodsky, CBOE chairman and CEO.

“It is imperative for CBOE to respond quickly and decisively to the rapid pace of change in today’s marketplace,” added CBOE vice chairman Edward Tilly. “The for-profit model can improve the exchange’s ability to react more quickly to competitive challenges and opportunities alike. There are still a number of hurdles to overcome in order to complete the process, but today’s decision represents an important first step in CBOE’s transition to a for-profit corporation.”