10.19.2011
By Terry Flanagan

Chi-X Gets New Investors

The brokerage-owned alternative trading system has sold minority equity stakes to several institutions.

Agency broker-dealer Instinet, which founded Chi-X Global in 2007, has sold a minority stake in the alternative trading system to a consortium of firms as it looks to expand the trading platform.

Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, Getco and Quantlab have combined to take an estimated 25 percent stake in Chi-X Global Holdings, the holding company for Chi-X Canada, Chi-X Japan and Chi-X Australia, which is expected to launch at month’s end. The terms of the transaction were not disclosed.

“The investment that our equity partners have made today demonstrates their commitment to Chi-X
Global and its businesses,” said Tal Cohen, chief executive officer of Chi-X Global. “With the support of our investors, Chi-X Global is well positioned to continue its growth and remain a positive force for change through market innovation and the introduction of competition.”

Despite the new equity investments, Instinet will retain a majority stake in the company that it founded.

The Australian Securities & Investments Commission on Oct. 17 gave notice to Chi-X Australia that all preconditions for obtaining the market license had been satisfied, paving the way for the exchange to launch at month’s end.

Extensive testing of systems and procedures has been conducted by Chi-X Australia, market participants and suppliers. It will commence operations on 31 October with a “soft launch,” which will permit trading in eight securities. Upon satisfactory completion of the soft launch phase, trading will be permitted in all S&P/ASX 200 component securities and ASX-listed ETFs.

Chi-X was first founded in 2007 by Instinet, an agency-only broker. Chi-X Europe, which was the company’s initial offering, was spun off as a separate entity in late 2007, and is now owned and operated by a consortium of broker-dealers. While Instinet still owns a 34 percent stake, Chi-X Europe is operated independently. It is currently the target of a takeover offer from Bats Global Markets. The transaction is awaiting regulatory approval from the U.K. Competition Commission, with a decision on the deal expected by early December. Chi-X Europe has about 20 percent market share in Europe.

Chi-X Global also operates Chi-East, a joint dark pool venture with the Singapore Exchange, and Chi-Tech, a technology services unit.

Related articles