The Securities and Exchange Commission has blocked a proposed deal to sell the Chicago Stock Exchange to a group of Chinese investors. The proposal had caused consternation on Capitol Hill.
The SEC, in rejecting the deal, said key parts of the offer were flawed and that those concerns were significant enough that the body didn’t even need to consider fears about foreign investment, and possible foreign interference, in U.S. markets.
“We have concluded that the Exchange has not met its burden to show that approval of the proposed rule change is appropriate,” the SEC said. “Accordingly, it is not necessary for us to consider either the relevance of such foreign investment concerns … or the merits of the concerns themselves.”
The offer was initially put forth in February 2016 and would have had China’s Chongqing Casin Group be the lead investor in the exchange, but the ownership would have been through a subsidiary, North America Casin Holdings.
U.S. officials had already approved the deal in December 2016. The Committee on Foreign Investment in the United States, a cross-agency body that examines such deals for security risks, gave its OK at the time under then-President Obama. Lawmakers, however, were unconvinced and there was a bipartisan effort to pressure regulators to block the deal.
The Chicago Stock Exchange was hoping to use the Chinese investment to open an exchange in China. It also eventually hopes to list Chinese companies in the U.S. In a statement, the CHX board and executive team said they are currently evaluating their options in the wake of the SEC’s decision.