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Exclusive: U.S. security panel clears Chinese takeover of Chicago Stock Exchange
December 14, 2016 / 9:22 PM / 9 months ago

Exclusive: U.S. security panel clears Chinese takeover of Chicago Stock Exchange

(Reuters) - The Committee on Foreign Investment in the United States (CFIUS) approved this week the planned sale of the Chicago Stock Exchange Inc (CHX) to Chinese investors led by Chongqing Casin Enterprise Group, according to U.S. Treasury documents seen by Reuters.

The move by CFIUS, which scrutinizes deals for potential national security concerns, comes despite many U.S. lawmakers having voiced concerns about the level of influence the Chinese state might gain over one of the oldest U.S. exchanges.

Relations between the United States and China could get choppy in the coming months. U.S. President-elect Donald Trump has already questioned the longstanding U.S. policy of acknowledging that Taiwan is part of “one China.”

“We are pleased with the CFIUS findings that there are no unresolved national security concerns with respect to the proposed transaction between the Chicago Stock Exchange and the multinational investor group,” CHX told Reuters in a statement.

CFIUS did not immediately respond to requests for comment.

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.

The deal is still under review by the U.S. Securities and Exchange Commission. If it also approves the deal, this would be the first sale of a U.S. exchange to investors from China.

Last February, a group of 46 U.S. lawmakers asked CFIUS to take a hard look at the deal. They included Rep. Robert Pittenger, a North Carolina Republican on the Financial Services Committee and the Congressional-Executive Commission on China.

Pittenger cited concerns that China, which has been accused of corporate espionage, would have access to the data of U.S. companies who use the exchange.

“This raises serious questions about the long-term integrity of our markets and confidence in the security of our trading systems, as the ability to undermine capital flows in any potential conflict would be devastating. This transaction should not have been approved,” said U.S.-China Economic and Security Review Commissioner Michael Wessel.

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.

Reporting by Diane Bartz in Washington, D.C. and John McCrank in New York; Editing by Tom Brown, Bernard Orr

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