China almost certain to buy stock exchange in the US

Market - Himanshu Gill - Dec 15,2016

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china almost certain to buy stock exchange in the us

China has now been cleared to buy the Chicago Stock Exchange by the Committee on Foreign Investment in the United States (CFIUS), this week.

Chinese investors led by Chongqing Casin Enterprise Group are now very close to taking over one of the oldest stock exchanges in the US. The CFIUS has declared them to be clear of all the national security concerns to buy the 134-year-old stock exchange.

The CFIUS cleared the deal despite many US lawmakers having raised concerns about the level of influence the Chinese state might force over one of the oldest US exchanges. Any official comments are yet to be made from CFIUS, as the deal was released by US Treasury documents.

The acquisition by China's Chongqing Casin Enterprise Group still faces US Securities and Exchange Commission’s approval. If cleared, the deal would give China a foothold in the vast American stock market, the largest in the world.

The struggling Chicago Stock Exchange is far smaller in its operations as compared to the Nasdaq (NDAQ) and the iconic New York Stock Exchange. Earlier this year, it accounted for just 0.5% of U.S. trading.

The deal was criticized from Washington State and from Donald Trump during a Presidential debate. Chinese investors are set to own 49.5% of the exchange after the purchase. Relations between the US and China could soar in the coming months, as Donald Trump has already questioned the longstanding U.S. policy of acknowledging that Taiwan is part of "one China." China, on the other hand, has raised serious concerns on these remarks.

If the Chicago Stock Exchange deal is cleared, it won't be the first time a foreign company would be investing in a U.S. stock exchange. In 2007, NASDAQ merged with OMX, a Nordic exchange, to become ‘NASDAQ OMX Group’. The exchange, however, has changed its name back to NASDAQ.