The buyout, which is subject to US regulatory approval, would mark the first time a Chinese company took control of an American bourse.
While the Chicago Stock Exchange accounts for a minuscule amount of trading volume relative to rivals like the New York Stock Exchange and Nasdaq Stock Market — it processes around 0.5 per cent of US trading volume — it would give Casin a foothold in the American equities market since trades legally need to take place on the exchange offering the best price.
Shengju Lu, the founder of the Casin Group, said that the acquisition will help “develop financial markets in China over the longer term and … bring exciting Chinese growth companies to US investors,” writes Adam Samson in New York.
China has been gradually opening its markets to outside investors. For instance, it launched the Shanghai-Hong Kong Connect in 2014 in a move that paved the way for foreign investors to access Mainland China stocks with fewer restrictions than was previously the case.
At the same time, there has been consolidation among US financial exchanges as new regulations in light of the financial crisis have made the trading business less lucrative. The IntercontinentalExchange Group, a derivatives marketplace, for example, bought the parent of the New York Stock Exchange in 2014.
John Kerin, the chief executive of the Chicago Stock Exchange, said that it agreed to the sale following a strategic review. The terms of the sale weren’t disclosed.
Founded in 1882, the Chicago Stock Exchange is working a new product called CHX|snap an on-demand auction that can be performed during the regular trading session that seeks to pull business back from so-called dark pools, exchanges that are operated by investment banks outside the public market.
Mr Kerin said the buyout by Casin would allow the exchange to roll the product out by this spring. The IEX Exchange, another group, has made waves in the exchange marketplace with the introduction of a product that would create a “speed bump” that would slow down high-frequency traders who are accused of exploiting open markets.