UBS Takes Chi-X Stake

Terry Flanagan

Swiss bank UBS has joined a consortium of five other financial institutions in taking an equity stake in the global trading platform operator.

“We are pleased to welcome UBS to our group of world class, distinguished equity partners,” said Tal Cohen, Chi-X Global chief executive officer. “As we continue to expand our global presence through new product offerings and strategic growth opportunities, we look forward to working closely with our investors and market participants globally.”

In October, Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley, Getco and Quantlab 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. UBS now is a part of the minority ownership group. The terms of the transaction were not disclosed.

Agency broker-dealer Instinet, which founded Chi-X in 2007, has been looking to divest itself of its Chi-X Global subsidiary in recent months. Chi-X Europe, which was the company’s initial offering, was spun off as a separate entity in late 2007, to be owned and operated by a consortium of financial institutions. Although Instinet at the time retained a 34 percent stake, Chi-X Europe was operated independently. Most recently, Kansas City-based Bats Global Markets acquired 100% of the equity of Chi-X Europe in a transaction that closed last week. The combined entity, Bats Chi-X Europe, has about a 25 percent market share in European equities trading. The combined entity is expected to realize between $8 million and $10 million in cost savings annually.

The Chi-X units in Canada and Japan have seen varying degrees of success to date. Launching around the same time, Chi-X Japan has garnered about 3% market share in Japan while Chi-X Canada has reached about 12% of trading volume north of the border. Market observers expect the recently launched Chi-X Australia to take about a 10% share of the Australian markets within its first 12 months. Chi-X Europe, prior to its merger with Bats, had gotten about 20% of market share in European trading since launching in early 2007.

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

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