US regulators on Thursday blocked the purchase of the Chicago Stock Exchange (CHX) by a group of investors including the Chinese company Chongqing Casin Enterprise Group Co (重慶財信).
Two years after the announcement of the deal, the US Securities and Exchange Commission (SEC) cited a lack of clarity in the details of the deal, including an inability to identify who exactly would control the exchange.
Members of the US Congress last summer expressed concern at the prospect of a Chinese company being among the largest shareholders of a US stock market — while US President Donald Trump also raised the issue during his campaign.
Photo: AFP
According to CHX’s proposal, Chongqing Casin would have acquired 29 percent of the Chicago Stock Exchange.
The son of Chongqing Casin’s board chairman, a US citizen, would have bought 11 percent of the company. The rest would have been divided among various US groups and individuals.
The SEC assessed that there was not enough information to prove those parties were not somehow linked to the Chinese company.
It also argued it could not be certain that it would be able to access the Chinese shareholder’s accounts if necessary.
Faced with suspicion from the authorities, three other Chinese groups initially looking to invest pulled out in autumn last year.
Founded in 1882, the Chicago Stock Exchange is one of the oldest in the US, handling less than 1 percent of daily trading according to Bloomberg.
Separately, India’s biggest stock exchange is keen to buy a 25 percent stake in the Dhaka Stock Exchange (DSE, rivaling an offer from a Chinese bourse.
“We are well positioned to help grow the Bangladesh market and the exchange, given our experience and track record,” National Stock Exchange chief executive officer Vikram Limaye said in a phone interview on Thursday.
The Shenzhen Stock Exchange has offered 22 taka per share to buy 25 percent of the Dhaka Stock Exchange, Rakibur Rahman, a director at the DSE, said by phone last week.
That is higher than the NSE’s 15 taka per share bid. The bourse will hold a meeting on Feb. 19 to finalize its pick before sending the proposal to the nation’s securities regulator.
“The process is still on and we’re hopeful,” Limaye said. “India and Bangladesh have a strong relationship. We hope that it will help us contribute to the development of markets.”
India is trying to match the Chinese exchanges expanding clout over south Asian bourses. The China Financial Futures Exchange Co, Shanghai Stock Exchange, Shenzhen Stock Exchange and two local financial institutions bought a 40 percent stake in the Pakistan Stock Exchange in December 2016. The NSE accounts for more than 80 percent of all stock market trading in India.
“We will approve the highest and best offer taking into account Bangladesh’s interests,” Saifur Rahman, executive director and spokesman for Bangladesh Securities and Exchange Commission, said by phone on Wednesday.
Additional reporting by Bloomberg
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