Bloomberg News

Bats Merger With Chi-X Wins Provisional U.K. Antitrust Clearance

October 20, 2011

Oct. 20 (Bloomberg) -- Bats Global Markets Inc.’s acquisition of Chi-X Europe Ltd., the region’s biggest alternative trading system, was provisionally cleared by U.K. antitrust regulators, who said sufficient competition remains.

Customers of both exchanges will still have the power to prevent the merged companies from raising trading fees by threatening to take their business to competitors, the U.K. Competition Commission said today.

“The customers of both these exchanges are in a particularly powerful position to combat any attempt by the merged company to raise trading fees, reduce service quality or otherwise exploit any loss of competition,” said Malcolm Nicholson, chairman of the regulator’s inquiry group.

Chi-X Europe, founded in March 2007 and owned by banks and brokers, has been in talks to be acquired by Bats, the operator of the second-largest alternative trading system in Europe. The merger was referred to the Competition Commission in June and the regulator is due to issue a final report by Dec. 2.

European Union regulators are examining a separate deal between Frankfurt-based Deutsche Boerse and the owner of the New York Stock Exchange, which would create the world’s biggest stock market.

Chi-X Europe was the first alternative trading platform in Europe to compete with traditional exchanges such as LSE and Deutsche Boerse by offering lower fees and faster trading.

The trading platform is partly owned by Instinet LLC, a New York-based unit of Nomura Holdings Inc., and by investment banks and traders including Credit Suisse Group AG, Getco LLC, Bank of America Corp., Citigroup Inc. and Morgan Stanley. Bats is owned by Bank of America, Citigroup, Getco, Credit Suisse and Morgan Stanley, among others.

--Editors: Anthony Aarons

To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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