U.S. regulators rejected a bid by a Chinese-linked consortium to take over the Chicago Stock Exchange, extinguishing an ambitious dream of starting an international listing venue from a minuscule market.
The Securities and Exchange Commission’s decision ends a process that lasted two years and took place in the crucible of a presidential campaign and a new administration that’s expressed skepticism over China’s policy motives.
Now that it’s over, the exchange founded in 1882 is left handling less than 1 percent of daily U.S. stock trading, missing out on an audacious project to court smaller companies, particularly those based in China. In a document posted on the SEC’s website Thursday, the regulator said the deal didn’t comply with U.S. rules governing stock exchanges.
The SEC said it couldn’t resolve concerns about the proposed ownership structure, which would’ve given 29 percent of the company to a China-based shareholder. The Chicago Stock Exchange couldn’t supply documents the regulator requested about relationships among the proposed buyers, according to the SEC.
What Your Peers Are Reading
Will Ruben, a spokesman for the Chicago Stock Exchange, declined to comment.
Though the transaction was relatively small, it drew outsize attention because of the country of origin of the lead investor, Chongqing Casin Enterprise Group Co.
SEC Chairman Jay Clayton, who joined the agency this year following a career as a deals lawyer, has publicly fretted that it’s too hard for companies to go public in the U.S. The exchange had hoped to address that situation by selling itself, while also creating a conduit to China.
But opponents of the takeover, including a number of U.S. lawmakers, said letting a Chinese firm invest in a U.S. exchange was a bad idea.