Strategy

Chinese Firm Acquires Chicago Stock Exchange

Casin Group, the first Chinese company to buy a U.S. exchange, is hoping to "bring exciting Chinese growth companies to U.S. investors.”
Matthew HellerFebruary 5, 2016

In the first purchase of a U.S. stock exchange by a Chinese company, the Chicago Stock Exchange said Friday it had agreed to be acquired by Chongqing Casin Enterprise Group.

Terms of the deal were not disclosed but Bloomberg, citing a person familiar with the matter, said it values the Chicago Stock Exchange at less than $100 million.

The 134-year-old exchange is a niche player in the U.S. equity market, handling only around 0.5% of US trading volume. It is mainly used by market makers that buy and sell the most active exchange-traded funds and hedge their positions using futures on the Chicago Mercantile Exchange.

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But the Financial Times said the deal would give the Chinese buyers “a foothold in the American equities market since trades legally need to take place on the exchange offering the best price.”

“We have reviewed CHX’s plans to improve market share through new growth initiatives and fully support them,” Shengju Lu, the founder and chairman of Casin Group, said in a news release. “Together, we have a unique opportunity to help develop financial markets in China over the longer term and to bring exciting Chinese growth companies to U.S. investors.”

CHX has been developing CHX Snap, an on-demand auction for large blocks of stock and hopes to eventually triple its daily volume. The exchange’s management and business operations will remain in place after the acquisition closes.

“With our new investment partners, we will have significant additional resources to pursue our new business initiatives,” Chicago Stock Exchange CEO John Kerin said, singling out CHX Snap’s launch in March.

Casin Group was founded in the 1990s, initially focusing on developing real estate projects in Chongqing before expanding into the environmental and financial industries. A long-term objective of the company, Kerin said, is to list Chinese companies in the U.S.

Chinese businesses have announced $70 billion of cross-border acquisitions and investments this year, on track to break last year’s record of $123 billion, according to data compiled by Bloomberg.

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