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SEC further delays decision on bid for Chicago Stock Exchange


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SEC further delays decision on bid for Chicago Stock Exchange

The Securities and Exchange Commission has again delayed a decision on a Chinese investor group's bid to acquire Chicago Stock Exchange Inc.

After delaying a decision in June, the SEC's three-member commission is poised to decide on the exchange's fate despite SEC staff recommending an approval for the approximate $22.0 million bid led by China-based Chongqing Casin Enterprise Group. The staff's recommendation "is stayed" until the commission orders otherwise, according to a letter from SEC officials to the Chicago Stock Exchange.

Staff recommended an approval of the bid, arguing that a series of corporate governance changes that the exchange put forward were enough to justify the deal. In the days leading up to the decision, the Chicago Stock Exchange submitted a series of proposals to to alter the exchange, including everything from changing its board structure and ownership to releasing investor certificates signed by each of the prospective owners.

"The Commission believes that the proposed ownership and voting limits are reasonably designed to eliminate the potential that the control of the Exchange by one or few stockholders would improperly interfere with or impair the ability of the Commission or the Exchange to effectively carry out their regulatory oversight responsibilities," the SEC wrote in its initial recommendation.

But in a brief letter to Chicago Stock Exchange officials, the SEC wrote that the commission, led by Chairman Jay Clayton and Commissioners Michael Piwowar and Kara Stein, will decide on the deal's fate at an undisclosed future date.

The move comes after several lawmakers and industry participants have critiqued the bid, arguing that the ownership of the exchange would lack transparency, effectively making it more difficult for the SEC to regulate.

"The Chinese government's continued rejection of fundamental free-market norms and property rights of private citizens makes me strongly doubt whether an exchange operating under the direct control of a Chinese entity can be trusted to 'self-regulate' now and in the future," wrote Sen. Joe Manchin, D-W.V., in a July 20 letter.

In December 2016, the agreed-upon deal was approved by the U.S. Committee on Foreign Investment in the U.S., which examines deals for possible national security concerns.

A Chicago Stock Exchange spokesperson could not be reached for comment.