Chongqing Casin Enterprise Group’s Recent Bid to Acquire the Chicago Stock Exchange (CHX)

July 11, 2017

Eleven Democratic and Republican U.S. Congress members have asked the U.S. Securities and Exchange Commission (SEC) to stop the sale of the Chicago Stock Exchange (CHX) to Chongqing Casin Enterprise Group (CCEG), a group consisting of China-based investors. The CHX is a small stock exchange accounting for less than 0.5% of the total stock exchange volume in the United States.

The deal was approved by the Committee on Foreign Investment in the United States (CFIUS) in December of last year, which found “no unresolved national security concerns with respect to the proposed transaction between the Chicago Stock Exchange and the multinational investor group”, as cited by Reuters.

The sale, which is valued at USD$20 million, is the first of its kind targeting a U.S.-based stock market. In a letter addressed to the SEC, the eleven members criticized the deal reasoning that “with little or no insight and transparency into government-dominated Chinese markets, the SEC will be unable to monitor the ownership structure … leaving CHX open to undue, improper, and possibly state-driven influence”, as quoted by the Wall Street Journal.

CCEG is a privately-held company, based in Chongqing, China, which primarily specializes and invests in real estate development and financial holdings. The company operates in China, Hong Kong and Australia. Their U.S. holdings are primarily located in Chicago and New Jersey. CCEG, according to the Wall Street Journal, “hopes to take Chinese firms public on the Chicago exchange and wants to open a new exchange in southwest China, according to a March 2016 letter from Chicago exchange CEO John Kerin to his company’s shareholders.”