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US rejects China-led bid for Chicago Stock Exchange

17 February 2018

After a review that lasted for more than two years, the top USA financial regulatory agency barred a Chinese-led group of investors from purchasing the Chicago Stock Exchange.

President Trump harshly criticized the proposed deal during his campaign, calling it an example of wealth leaving the United States.

In August, the regulator approved the sale of the privately owned exchange, but the decision was put on hold for further review within minutes after the announcement.

"This has been a long fight, and I'm grateful we now have a president who recognises the national security threats of allowing a Chinese government-affiliated company to own the Chicago Stock Exchange", Republican congressman Robert Pittenger said in a statement.

Under the proposal, the Chinese-led North America Casin Holdings group would have bought a minority share of the privately owned Chicago Stock Exchange. The Chicago Stock Exchange handles only a small fraction of the stock trades that take place every day. It also had planned to at some point to build an exchange based in China using CHX technology.

Manchin added in his statement at the time that Chinese currency manipulation could negatively influence US markets if the deal was approved. The Committee on Foreign Investment in the United States (CFIUS) said in December 2016 that there were "no unresolved national security concerns" related to the takeover.

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"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 SEC said on Thursday.

In a letter sent to the SEC chairman over the summer, 11 members of Congress said they had concerns about the "severe lack of transparency in China", which would make it hard for the committee for "prevent undue influence or control over a national securities exchange". 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 decision by the SEC comes during a time of increased trade tensions between the US and China.

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

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US rejects China-led bid for Chicago Stock Exchange