USA rejects 'Communist Chinese' takeover of Chicago Stock Exchange

Chicago Stock Exchange arch

The top regulator for US financial markets is barring a Chinese-led group of investors from buying the Chicago Stock Exchange.

The move by the Securities and Exchange Commission (SEC) ends a two-year battle to gain approval for the sale and underscores the more hostile environment facing Chinese buyers under the administration of U.S. President Donald Trump.

In August of previous year, SEC staff reportedly recommended that the deal be approved, but amid stiff opposition from U.S. lawmakers then announced its commissioners would review the sale.

The exchange, which handles just 0.5% of United States stock trades, had said the deal would have proved the exchange with "vital capital".

In the most recent signs of continued friction, Beijing in early February launched an investigation of anti-dumping into sorghum shipments from the U.S. following the U.S. Department of Commerce's self-initiated dumping probe of the aluminum imports from China last November.

If the deal had been approved it would have marked the first time Chinese investors had been direct owners of a USA stock exchange, although not the first time a US exchange had foreign owners.

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The proposed acquisition had been approved in late 2016 by the Committee on Foreign Investment in the United States, which reviews deals for national security concerns.

"The review process has also raised questions about whether the proposed ownership structure will allow the commission to exercise sufficient oversight of the exchange", the Securities and Exchange Commission (SEC) said on Thursday.

The commission said it did not consider broader criticisms of the deal's potential impact on market security or whether Chongqing Casin had ties to the Chinese government.

The decision by the SEC comes during a time of increased trade tensions between the USA and China. The S.E.C. said it was also not sure it would have access to the exchange's books and records after the deal. The exchange said it needed the infusion of capital to invest in its operations and attract business.

Technically, CHX could still resubmit its proposal or seek other buyers.

The landmark Securities Exchange Act of 1934 governs secondary trading of securities - stocks, bonds, and debentures - in the United States, and provides the basis for government oversight of USA financial markets.

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