Cboe To Acquire Chi-X Asia Pacific
- Planned transaction provides Cboe with a single point of entry into Australia and Japan, two of the world’s largest securities markets
- Ownership of Chi-X Asia Pacific helps enable Cboe to expand its global equities business, including bringing industry-leading block platform, BIDS Trading, to the Asia Pacific region
- Transaction positions Cboe to further execute on its strategy to build one of the world’s largest global equities and derivatives trading networks, expanding its global market data offering and access to its proprietary products
- Deal is expected to close in the second or third quarter of 2021, pending regulatory review
Cboe Global Markets, a market operator and global trading solutions provider, announced it has entered into a definitive agreement to acquire Chi-X Asia Pacific Holdings, Ltd. (Chi-X Asia Pacific), an alternative market operator and provider of innovative market solutions, from J.C. Flowers & Co. LLC. This acquisition will provide Cboe with a single point of entry into two key capital markets – Australia and Japan – to help enable it to expand its global equities business into Asia Pacific, bring other products and services to the region, and further expand access to its unique proprietary product suite in the region. The transaction is expected to close in the second or third quarter of 2021, subject to regulatory review and other customary closing conditions.
Ed Tilly, Chairman, President and CEO at Cboe Global Markets, said: “With the planned acquisition of Chi-X Asia Pacific, we continue to execute on our growth strategy by broadening our geographic and asset class presence, while enabling the further extension of our product offerings to our global network of customers. This is an exciting investment in attractive, growing markets that will complement our North American and European operations and provide a foothold in the key Asia Pacific region, positioning us to become a truly global marketplace for our customers. In a short number of years, the Chi-X Asia Pacific team has built their business into one of the largest market operators in Asia Pacific. We look forward to working with them to accelerate the company’s further growth, building on our shared cultures of innovation and customer-first approach as we aim to bring greater choice to investors in Asia Pacific.”
Chi-X Asia Pacific is one of the most successful alternative market operators in Asia Pacific, with core operations in Australia and Japan. Chi-X Australia (CXA), the country’s second largest securities exchange achieving an 18.4 percent total market share, offers trading in all Australian-listed securities, as well as the exclusive trading of CXA quoted warrants and ETFs. Chi-X Japan (CXJ), a leading proprietary trading system for Japanese equities and third largest equities venue in the country with a 2.7 percent lit market share, offers four trading books including both displayed and non-displayed mechanisms.
David Howson, currently President of Cboe’s European operations will lead the company’s business expansion into the region and has been promoted to President, Europe and Asia Pacific. Mr. Howson will work closely with the global Cboe team and with the Chi-X Asia Pacific local management teams led by Vic Jokovic, Chief Executive Officer at Chi-X Australia and Toru Irokawa, Representative Director and President at Chi-X Japan, who will continue to lead their businesses.
Cboe plans to leverage Chi-X Asia Pacific’s expansive presence in Asia Pacific and bring to the region BIDS Trading’s industry-leading block trading capabilities. With BIDS’ current network covering major North American and European equities markets, the addition of Asia Pacific equities is expected to create a global block trading platform to serve a broader base of customers. Cboe also expects to enhance investor access to other products and services. In particular, Chi-X Asia Pacific is expected to provide an expanded distribution network enabling Cboe to further offer its unique proprietary products to clients in Australia and Japan.
This deal also creates an opportunity for Cboe to become the global leader in equities market data, offering comprehensive data from most major markets around the world including the U.S., Canada, Australia, Japan and 15 European countries.
The planned acquisition builds on Cboe’s newly created Data and Access Solutions business, which combines Cboe Information Solutions with its global market data and access services into one holistic offering, enabling customers around the world greater access to all of Cboe’s expanded data and analytics capabilities through a unified offering.
Mr. Jokovic said: “Over the past decade, Chi-X Australia has built an enviable reputation as an innovative market operator with superior market expertise, customer service and a pioneering spirit that strongly aligns with Cboe’s legacy of product and market innovation. We are excited to draw upon Cboe’s core strengths as a leading global exchange operator to further enhance the competitive landscape in the Australian markets with new innovation and market solutions to better meet customer needs.”
Mr. Irokawa said: “Chi-X Japan is currently the only broker-neutral proprietary trading system in Japan, and remains committed to delivering best execution and significant cost-savings for both retail and institutional investors through our superior services and rich set of trading solutions. With Cboe’s investment in Chi-X Japan, we look forward to enhancing our capabilities and bringing vital competition to help strengthen the efficiency and resiliency of the entire Japanese equities market.”
Australia is the world’s 9th largest global economy, representing approximately $2.2 trillion in market capitalization and averaging 4.6 billion shares traded a day in its equities market. Japan ranks as the 4th largest global economy, representing $6.2 trillion in market capitalization with over $5.1 trillion total value traded annually in its equities market.
Cboe plans to fund the transaction with cash on hand, supplemented by existing credit agreements, if needed. The transaction is expected to close in the second or third quarter of 2021, subject to regulatory review and other customary closing conditions. Terms of the deal were not disclosed, however the company noted that the purchase price is not material from a financial perspective and is expected to be nominally accretive to the company’s adjusted earnings in 2021. Chi-X Asia Pacific generated approximately $26 million in net revenue for the twelve months ended December 31, 2020, reflecting a 26 percent growth rate compared to the prior year, with non-transactional revenue comprising 67 percent of the overall net revenue. For additional background information on Chi-X Asia Pacific, see the slide deck available under events and presentations on Cboe’s Investor Relations website at http://ir.cboe.com/events-and-presentations.
Legal advisors to Cboe Global Markets on the transaction are Sidley Austin LLP (U.S. and Hong Kong), King & Wood Mallesons (Australia), Nagashima Ohno & Tsunematsu (Japan) and SyCip Salazar Hernandez & Gatmaitan (Philippines), with BofA Securities serving as financial advisor.
Cboe Appoints Bryan Harkins as President of BIDS Trading, Announces Planned Retirement of Tim Mahoney
Cboe Global Markets, a market operator and global trading solutions provider, announced the planned retirement of Tim Mahoney, President of BIDS Trading, from the company. Bryan Harkins, Executive Vice President and Head of Markets at Cboe Global Markets, has been appointed his successor and will assume the role of President of BIDS Trading, effective immediately.
Mr. Mahoney’s impressive career spans nearly 40 years in the financial industry and global equities market. He joined BIDS Trading in 2006 and during his tenure, led the strategic direction of the company and grew the BIDS Alternative Trading System (ATS) into the largest equity block trading venue for U.S. equities. Prior, Mr. Mahoney spent more than two decades at Merrill Lynch Investment Management, where he held a number of senior leadership positions in U.S. equities trading.
Ed Tilly, Cboe Global Markets Chairman, President and Chief Executive Officer said: “On behalf of Cboe, I want to thank Tim Mahoney for his leadership and contributions, which have helped guide BIDS Trading’s transformation into the industry-leading block trading venue it is today. Under Tim’s tenure during the past 15 years, the company significantly grew its capabilities and client network across North America and Europe and created a successful and profitable enterprise that is extremely well-positioned for the future. Bryan is a proven leader who has built out some of Cboe’s most successful businesses, and we are confident that he will build upon the foundation laid by Tim and his team and take BIDS Trading to the next level to reach new markets and geographies globally.”
In a related announcement today, Cboe announced plans to acquire Chi-X Asia Pacific Holdings, Ltd., an alternative market operator and provider of innovative market solutions, which would help enable it to further expand its global equities business into Asia Pacific and bring to the region BIDS Trading’s block trading capabilities. With BIDS Trading’s current network covering major North American and European equities markets, the addition of Asia Pacific equities is expected to create a global block trading platform to serve an even broader base of customers.
Bryan Harkins said: “I am honored to be appointed the next President of BIDS Trading, and grateful for the opportunity to lead this organization and execute on our vision to create a global block trading enterprise and multi-asset class platform that is expected to span North America, Europe and Asia Pacific. Tim has built an exceptionally talented team at BIDS Trading who shares my commitment to relentless innovation, best-in-class customer service and industry-leading technology. We believe BIDS to be an absolutely essential aspect to our next frontiers of global growth and I look forward to working to lead the company to even greater heights of achievement. ”
Mr. Harkins has more than 20 years of experience in the electronic trading space. He joined Cboe in 2017 as part of Cboe’s acquisition of Bats Global Markets and led the sales, product development and competitive strategy for Cboe’s U.S. equities, ETP listings, options, futures and global foreign exchange businesses. Mr. Harkins initially joined Bats in 2014 after its acquisition of Direct Edge as Head of U.S. Markets and guided Bats to achieve record market share levels in both its U.S. Equities and U.S. Options businesses. In addition, he built and grew Bats’ ETF listings business into a major industry player and Bats’ FX business into one of the largest institutional spot FX platforms in the world. Mr. Harkins was a founding employee and Chief Operating Officer at Direct Edge, which grew to become one of the leading stock exchange operators in the U.S.
Tim Mahoney said: “I am proud to see BIDS Trading enter its next chapter of growth with our current expansion into Canada underway and our planned expansion into Asia Pacific, which is the culmination of a multiyear effort to extend the BIDS Trading network globally. I am deeply honored to have led this great company to reach this milestone with Cboe and have tremendous confidence in BIDS Trading’s future success under Bryan’s leadership. His demonstrated leadership, personal style and extensive knowledge of the securities electronic trading space make him a great fit as the next leader of BIDS Trading. I look forward to working closely with him over the coming months to facilitate a smooth transition and will continue to follow the success of this excellent team and company in the future.”
Cboe completed its acquisition of BIDS Trading on December 31, 2020. BIDS Trading is a registered broker-dealer and the operator of the BIDS Alternative Trading System (ATS), the largest block-trading ATS by volume in the U.S. The acquisition follows Cboe and BIDS Trading’s successful partnership in Europe, which began in 2016 with the creation of Cboe LIS for European equities block trading. Since its launch, Cboe LIS has grown to become one of the largest block trading platforms in Europe, accounting for approximately €240 million in average daily volume.
Cboe maintains BIDS as an independently managed and operated trading venue and broker/dealer, separate from and not integrated with the Cboe U.S. securities exchanges. Mr. Harkins will lead BIDS Trading as an independent business within Cboe Global Markets, reporting into an independent committee of the board of directors of Cboe Global Markets.
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