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Amex Plans Demutualization

It will convert to for-profit status.

Updated from 9:28 a.m. EST

The American Stock Exchange authorized a plan to convert to for-profit status, setting the stage for a public offering down the road.

Amex's board of governors approved the initiation of a demutualization that could eventually result in owners trading in their seats for shares. Seat holders will have to approve the plan.

"We have been carefully examining the structure of the exchange for months," Amex said. "The Amex has undergone a major transformation over the past year, improving its technology and regulatory areas, and the vote to take this course of action will further position the Amex for growth."

In moving toward stock-based ownership, the Amex would be taking advantage of a bull market for publicly traded exchanges, the most recent example of which is the huge runup in shares of

NYSE Group


. Stock and commodity markets worldwide have been changing their ownership structure for the past two years, partly to cash out their owners and partly to create currency for acquisitions.

The century-old Amex has little of the NYSE's clout or celebrity, however. In recent years, the company has tried to carve out a niche as a forum for trading options and exchange-traded funds, but remains an also-ran in the former. Its 162 listed ETFs is the most of any exchange.

The AMEX's move to change its ownership structure, which seemingly mimics the NYSE's, has different goals and implications, according to Chief Executive Neal Wolkoff.

"There is a lot of talk

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in the industry about being a target or an acquirer," Wolkoff said. "Really what we are looking for is money for branding, to grow technology, expand our business and to be a better advocate for our listed companies."

The NYSE's recent merger with Archipelago and public listing, although successful, didn't come without significant scrutiny, something that the Wolkoff hopes to avoid.

"Ultimately, the NYSE had a great accomplishment and managed to unify their ownership to become public. But that accomplishment played out publicly and contentiously," he said, "One of the fundamental differences

of the AMEX is that we are of a different size and there is a different membership. I don't think that you will see a contentious debate."

Still the NYSE has already made it through some of the issues that the AMEX is facing now, which has left some exchange investors skeptical in its ability to actually make it through the public market scrutiny that it will have to undergo. Recently,

reported that the

Securities and Exchange Commission

had been gathering trading information about specialists who operate on the AMEX, among other exchanges, similar to investigations that the NYSE underwent two years ago. Merger activity and increased competition from electronic start-ups has made the future more uncertain. The changing landscape could be an opportunity for the Amex -- or be another nail in its coffin.

Still, the company is confident that its relatively new management can pull it up to the level of its better-known competitors, and a public currency would enable it to obtain the cash to make some long needed changes.

"The reason why we are doing this is the same reason that any growing business that believes in itself wants to tap the markets," said Wolkoff.