Chinese-Led Group Buys Stock Exchange

Chicago Stock Exchange Sold to Chinese

The deal is troubling because Chinese companies have a long history of lapses in business ethics, and this would put a Chinese company in the middle of the U.S. economic machine.  There remain political issues to be dealt with, and the regulatory challenges are still pending, but the offer seems to have found a positive response.

Chongqing Casin Enterprise Group has signed a definitive agreement to acquire the company, according to a statement Friday. The deal values the Chicago Stock Exchange at less than $100 million, according to a person familiar with the matter, who asked to not be identified because the terms weren’t disclosed publicly. The exchange expects the deal to close in the second half of the year, though that will require regulatory approval.

“We’re a good fit. Our strategy is something they like and is consistent with theirs,” Chicago Stock Exchange Chief Executive Officer John Kerin said in a phone interview. “We provide technology and we’re a standalone, full-service exchange that they can grow in a manner that suits their needs.”

 The acquisition would be the first of a U.S. exchange by a Chinese company. The 134-year-old bourse only handles about 0.5 percent of U.S. stock trading, but a deal gives a buyer a beachhead in the $22 trillion American equity market. There’s also the potential for growth given that regulations require trades to be routed to whichever exchange has the best price for a stock at a given moment.

Casin Group said it was attracted to the market because of the potential to “bring exciting Chinese growth companies to U.S. investors,” according to a quote in the statement from Shengju Lu, Casin’s founder and chairman.

Founded in the 1990s through a privatization of state-owned assets, Casin Group initially focused on developing real estate projects in Chongqing before expanding into the environmental and financial industries. While the firm owns stakes in banks and insurers, it has never owned an exchange. Calls to the company’s Chongqing headquarters went unanswered on Friday.

Source: bloomberg.com