SEC delays ruling on sale of Chicago stock exchange

By PAUL WELITZKIN | | Updated: 2017-08-11 00:41

Despite an approval recommendation from its staff, the US Securities and Exchange Commission (SEC) postponed a decision on the proposed sale of the Chicago Stock Exchange (CHX) to a group led by Chinese investors.

The SEC had been expected to rule Wednesday on the sale of the 135-year-old exchange. Instead, the regulatory agency said SEC commissioners would make a final decision on the proposed transaction in the coming weeks.

In 2016 the CHX reached an agreement to be acquired by Chinese group of investors. The exchange hopes the acquisition will help it lure Chinese companies looking to list in the US. As of January 2016, the exchange handled just 0.5 percent of US trading, according to the TABB Group.

"CHX recognizes the significant time that the Committee on Foreign Investment in the United States (CFIUS) and the SEC staff spent analyzing the proposed transaction prior to their approval. We are confident that, upon further review by the (SEC) commissioners, they will also conclude that this transaction is consistent with the Exchange Act and will allow CHX to significantly add to exchange staff, provide needed capital to the small and medium-sized businesses that create jobs, and bring international business back to the United States," the CHX said in a statement.

CFIUS, made up of representatives from several federal agencies, reviews foreign acquisitions, mergers and takeovers of US businesses that can raise national security concerns. The panel approved the sale late last year provided that the exchange outsource its oversight of trading to a third party, which the exchange agreed to do.

Lawmakers in Washington have expressed concern about the transaction, questioning the ownership group. Last year the CHX said the new owners would include a Chinese company, Chongqing Casin Enterprise Group Co, which would own 20 percent of the exchange's parent company. The filing said other proposed owners include Chongqing Jintian Industrial Co Ltd, Chongqing Longshang Decoration Co Ltd, and Raptor Group, the family office of former hedge-fund manager Jim Pallotta, which also owns part of Italian soccer team AS Roma.

US investors include Jay Lu, a US citizen and AnthonySaliba, a board member of CHX Holdings Inc.

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