Sale of Chicago Stock Exchange Blocked by SEC

On Thursday, U.S. regulators killed off sale of the Chicago Stock Exchange to a China-based lead group of investors saying that a lack of background information on the buyers was a threat to its ability to carry out proper monitoring of the exchange following the sale.

The Securities and Exchange Commission move ends a battle of two years of gaining approval for this sale and underscores an environment that has become more hostile for Chinese buyers under President Donald Trump’s administration.

Trump brought up the CHX deal twice during his presidential election campaign as one example of how wealth and jobs were exiting the U.S.

Initially the staff at the SEC approved this sale of the exchange, which is privately owned, back in August, but within just minutes of making the announcement, commissioners from the SEC, led by Jay Clayton the chair and an appointee of Trump, put a hold on the decision for additional review.

Lawmakers in the U.S from both sides harshly criticized the deal through joint letters sent to the SEC, saying that it would allow the government of China to have access to the financial markets of the U.S. and questioned the ability of the SEC to monitor and regulate foreign owners.

CHX is just a niche player compared to the entire industry, handling only 0.5% of equities trades in the U.S.

The acquisition, which was first proposed back in February of 2016 and worth approximately $25 million, was led by privately held Chongqing Casin Enterprise Group that invests in financial holdings and real estate development.

Casin has continued to deny any affiliation with the government of China and there have been no connections shown. CHX would not comment Thursday after the announcement of the final decision.

The decision by the SEC comes during a time of increased trade tensions between the U.S. and China.

In the most recent signs of continued friction, Beijing in early February launched an investigation of anti-dumping into sorghum shipments from the U.S. following the U.S. Department of Commerce’s self-initiated dumping probe of the aluminum imports from China last November.

Casin has previously said that it saw much potential in the CHX and that its goal for the long term was listing companies from China in the U.S. on its bourse. It also had planned to at some point to build an exchange based in China using CHX technology.

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