CBOE Downplays Early Close of Bats Deal


An early close to the CBOE’s $1.68 billion acquisition of Bats Global Markets might not be in the cards despite competitor Nasdaq’s quickly completed purchase of the International Securities Exchange earlier this year, according to CBOE management.

Edward Tilly, CBOE

Edward Tilly, CBOE

“While we maintain that we are ready for the first half of 2017, our planning is perhaps much more aggressive than that,” said CBOE CEO Edward Tilly during the exchange operator’s third-quarter earnings call. “With that said, it is very difficult to predict the various examinations primarily in antitrust and the rules filings for Bats and CBOE’s perspective.”

The CBOE and Bats already have established a joint integration team that is mapping out potential synergies and revenue opportunities for the combined company.

Before the teams can act on their plans, there is still a few regulatory and anti-trust examinations that need to take place before the deal closes, according to John Deters, chief strategy officer and head of corporate initiatives at the CBOE who was also on the call.

Deters expects each company to hold its shareholder vote in early 2017.

“Prior to that, there are joint proxy and registration statements that need to be filed, he said. “We also are making the full host of regulatory approvals and applications for those approvals in the US and Europe. On the 19th of October CBOE and Bats filed our notification report form under Hart-Scott-Rodino Act to the US Federal Trade Commission and the US Department of Justice.”

Although the CBOE management plans to migrate its markets on to Bats’ proprietary platforms once the deal closes and eventually provide clients with a single trading platform, the exchange operator will continue its development of its CBOE Vector trading platform, said Tilly.

The CBOE had planned to start moving its CBOE, C2, and CBOE Futures Exchange markets on to the new platform earlier this year before discussing the possible acquisition of Bats.

The continued development of CBOE Vector throughout the rest of the year will not be an additional expense for the CBOE.

“Everything we’ve done on Vector so far, except for some up-front planning, has all been capitalized and has been resting on our balance sheet,” Tilly added.


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