Chinese investor group to buy Chicago Stock Exchange
Chicago Stock Exchange Inc, one of the oldest exchanges in the United States, on Friday announced its planned sale to an investor group led by China's Chongqing Casin Enterprise Group.
The parties did not disclose terms of the deal, which is expected to close in the second half of the year.
If regulators approve the deal, this would be the first sale of a U.S. exchange to investors from China but not to a foreign entity. A unit of Germany's Deutsche Boerse AG (DB1Gn.DE) purchased the International Securities Exchange in 2007.
Under new ownership, the Chicago Stock Exchange, which is known as CHX, would have the funding for efforts like revamping its listings program, Chief Executive Officer John Kerin said in an interview.
"They like our strategy, and they want us to continue to execute on it," he said.
The 134-year old bourse plans to seek approval to list U.S. companies that want to access the capital markets but may not meet the standards of Nasdaq Inc (NDAQ.O) or Intercontinental Exchange Inc's (ICE.N) New York Stock Exchange.
A long-term objective of Casin Group, a privately held company that invests in real estate development and financial holdings, is to list Chinese companies in the United States, Kerin said.
Casin Group is also considering starting an equities exchange in Chongqing in Southwest China using CHX's model and technology, Kerin added.
Plans call for CHX's management and business operations to remain in place. "Together, we have a unique opportunity to help develop financial markets in China over the longer term and to bring exciting Chinese growth companies to U.S. investors," Casin Group Chairman Shengju Lu said in a statement.
CHX is a niche player in the U.S. equities market, executing about 0.5 percent of U.S. stock transactions.
The exchange, with locations in Chicago and New Jersey, is mainly used by market makers that buy and sell the most active exchange-traded funds and hedge their positions using futures on CME Group Inc's (CME.O) Chicago Mercantile Exchange.
CHX plans to introduce on-demand auctions for large blocks of stock, called CHX Snap auctions, by the end of March and hopes to eventually triple its daily volume, Kerin said.
sian share markets were scorched on Tuesday as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe haven assets.
As fear overwhelmed greed, yields on longer-term Japanese bonds hit zero for the first time ever, the yen surged to a 15-month peak and gold reached its most precious since June.
Japanese Finance Minister Taro Aso felt moved enough to warn the yen's rise was "rough", something of an understatement as the Nikkei .N225 nosedived 4.9 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1 percent, and would have been lower if not for holidays in many centres.
"Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating," said Jo Masters, a senior economist at ANZ.
All of which magnified the stakes for Federal Reserve Chair Janet Yellen's testimony this week.
"She needs to come across as optimistic without being too hawkish and cautious without being negative," said Masters. "Hawkishness or dovishness could easily exacerbate the current sell-off, tightening financial conditions further."
Wall Street did pare its losses but still ended deep in the red. The Dow .DJI lost 1.1 percent, while the S&P 500 .SPX fell 1.42 percent and the Nasdaq .IXIC 1.82 percent. [.N]
The rout began in Europe where the FTSEurofirst 300 .FTEU3 index shed 3.4 percent to its lowest since late 2013, led by a near 6 percent dive in the banking sector .SX7P.
Deutsche Bank (DBKGn.DE) alone sank 9.5 percent as concerns mounted about its ability to maintain bond payments. Late Monday, the German bank said it has "sufficient" reserves to make due payments this year on AT1 securities.
The cost of insuring bank debt against default also climbed to its highest since late 2013. Borrowing costs in Spain, Portugal and Italy jumped as investors demanded a fatter risk premium over safer German paper, where two-year yields hit record lows at minus 52 basis points.
FEAR FACTOR
"The 'fear factor' in markets has morphed from being about an emerging market hard-landing and collapsing oil prices to being about the extent of the slowdown in the developed world and the ability of central banks to reflate asset values yet again," said analysts at Citi in a note.
The Bank of Japan's recent shift to negative rates has fuelled concerns that ever-more exotic monetary policy is rapidly reaching the point of diminishing returns.
Yet murmurings about the risk of recession in the United Sates has also led investors to wager the Federal Reserve will have to slow, or suspend altogether, plans to normalise rates.
Futures markets have priced out any chance of a hike in March and imply a funds rate of just 0.45 percent by December <0#FF:>. The current effective funds rate is 0.38 percent.
That has pulled down 10-year Treasury yields to their lowest since early 2015 at 1.70 percent US10YT=RR and undermined bullish bets on the U.S. dollar.
It touched a six-week trough on the Swiss franc CHF=, while the euro edged up to $1.1217 EUR=. Against a basket of currencies, the dollar eased 0.1 percent to 96.485 .DXY.
By the far the biggest mover was the yen, long considered a safe haven given Japan's position as the world's top creditor nation. The dollar dived to 114.65 yen JPY=, having been above 121 just a week ago, while the euro fell to 128.68 EURJPY=.
With more and more sovereign bonds paying negative rates, the relative cost of holding gold has seemed less and less of a burden. The metal XAU= reached its strongest since June at $1,200.60 an ounce, to last trade at $1,193.60.
Oil prices bounced slightly after three sessions of losses. Brent futures LCOc1 added 37 cents to $33.25 a barrel, while U.S. crude CLc1 rose 51 cents at $30.19.
After Chinese markets closed, China's central bank resumed its easing cycle, injecting an estimated $100 billion worth of long-term cash into the economy. Long-dated U.S. Treasury prices rose after the weak housing data supported the view that the Federal Reserve could slow the pace of interest rate hikes this year. Recent U.S. economic reports including a pick-up in inflation had shifted the view the Fed could raise interest rates before year-end.
The benchmark 10-year note US10YT=RR was last up 3/32 in price to yield 1.752 percent, down from 1.764 percent late on Friday.
Finance ministers and central bankers from the Group of 20 announced an agreement to use "all policy tools – monetary, fiscal and structural – individually and collectively" to reach the group's economic goals.
The dollar rose against a basket of six major rivals, pushing the dollar index up 0.2 percent. But the greenback tumbled against the Japanese yen, losing around 1 percent.
Gold, another investor "safe haven," rose and was on track for its best month in four years.
Crude futures rose as Saudi Arabia said it would work with other oil producers to limit oil market volatility.
Brent futures LCOc1 were trading at $35.98 a barrel, up 2 percent from their previous close. U.S. crude futures CLc1 were up 2.5 percent at $33.40.
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