On verification by the SEC’s commissioners, led by Chairman Jay Clayton, the regulator was unable to locate the source of funds for the proposed deal; they were also unable to get sufficient information on the proposed buyers.
U.S. regulators have rejected the sale of the Chicago Stock Exchange (CHX) to a group of China-based investors, in part because they were unable to get enough information on the sources of their funds as well as information on some of the proposed buyers.
“Because of these concerns … we are unable to find that CHX has met its burden of demonstrating that the proposed rule change is consistent with the Exchange Act,” said the U.S. Securities and Exchange Commission (SEC) in a statement.
“We therefore disapprove the proposed rule change.”
Although the proposed acquisition had cleared the rigorous scrutiny by the Committee on Foreign Investment in the United States in December 2016, SEC approval was awaited.
Incidentally, the SEC’s Staff had initially approved the sale of the privately held stock exchange in August 2017, the SEC commissioners, led by Chairman Jay Clayton, put that decision on hold in August 2017, stating it needed further review.
If the deal would have gone through, it would have seen CHX sold for an undisclosed price to a consortium led by Chongqing Casin Enterprise Group; the deal has drawn harsh criticism from U.S. lawmakers who questioned the SEC’s ability to regulate and monitor the foreign owners if approved.
CHX declined to comment.
In a filing posted on its website on Thursday, the SEC stated it has found at least 4 reasons why the deal did not meet laws governing the ownership of U.S. exchanges which are stricter due to the role they play in the U.S. economy.