Cboe Global Markets, a leading provider of global market infrastructure and tradable products, announced it has completed its acquisition of Chi-X Asia Pacific Holdings, Ltd. (Chi-X Asia Pacific), an alternative market operator and provider of innovative market solutions. Through ownership of Chi-X Asia Pacific, Cboe gains entrance into two of the world’s largest securities markets – Japan and Australia – to establish a significant presence in the Asia Pacific region for the first time.
“Welcoming Chi-X Asia Pacific to the Cboe network represents an exciting milestone in Cboe’s growth story and another important step in our vision to become a truly global marketplace for our customers,” said Ed Tilly, Chairman, President and Chief Executive Officer at Cboe Global Markets. “The team at Chi-X Asia Pacific shares Cboe’s dedication to defining markets through innovative products, services and trading solutions. We look forward to the opportunities ahead as we welcome the Chi-X team to the Cboe community and work together to accelerate Chi-X Asia Pacific’s further growth and extend Cboe’s global footprint.”
Through Chi-X Asia Pacific, Cboe now has the opportunity to bring new trading solutions and services to the Asia Pacific, including extending the industry-leading block trading capabilities of BIDS Trading to the region. BIDS, acquired by Cboe in January 2021, operates the largest block trading ATS by volume in the US and one of the largest block trading platforms in Europe. With BIDS’ current network covering the US, Europe and expanding into Canada, the addition of Asia Pacific is expected to create a global block trading platform to serve an even broader base of customers.
Cboe plans to fully integrate Chi-X Asia Pacific into its existing global business operations and technology platforms, beginning with the integration of Chi-X Asia Pacific and BIDS. Chi-X Australia and Chi-X Japan are planning to migrate to Cboe’s state-of-the-art trading platform thereafter. Providing one, unified technology platform will help provide market participants greater access to Cboe’s diverse product set and more efficiency, resiliency and functionality when trading across Cboe’s markets.
Vic Jokovic, Chief Executive Officer at Chi-X Australia, said: “Through the years, Chi-X Australia has established itself as the country’s most innovative market operator, consistently delivering best-in-class trading solutions, technology and customer service. We couldn’t be more excited for the future of our exchange as we join the Cboe team and leverage its global resources to further our growth and develop new products and services that will benefit the Australian markets.”
Toru Irokawa, Representative Director and President at Chi-X Japan, said: “Chi-X Japan has gained tremendous success by providing superior service and trading solutions that help deliver the best execution and significant cost-savings for retail and institutional investors. We look forward to the many opportunities that this acquisition will create and expect Cboe to further propel our growth, as well as enhance the competitive landscape to help bring greater efficiency and resiliency to the Japanese markets.”
Chi-X Asia Pacific positions Cboe to expand its global equities business into the Asia Pacific and build an unparalleled, high-value global market data business that is expected to offer data from major markets around the world, including the U.S., Canada, Australia, Japan and 18 European countries. In addition, Cboe plans to further broaden investor access to its unique suite of proprietary products – including U.S. index options products based on the S&P 500 Index (SPX) and Cboe Volatility Index (VIX) – to meet growing investor demand globally for U.S.-based derivatives products. Cboe plans to extend trading hours for SPX and VIX options to nearly 24 hours a day beginning November 21, subject to regulatory approval.
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Chi-X Asia Pacific is one of the most successful alternative market operators in the Asia Pacific, with offices in Australia, Japan, Hong Kong and the Philippines. Chi-X Australia (CXA), the country’s second-largest securities exchange achieving an 18.6 per cent total market share1, 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 2.5 per cent lit market share2, offers four trading books, including both displayed and non-displayed mechanisms.
Cboe acquired Chi-X Asia Pacific from J.C. Flowers & Co. LLC. 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. Cboe funded the transaction with cash on hand and borrowings under its term loan credit agreement. Chi-X Asia Pacific generated approximately USD 26 million in net revenue for the 12 months ended December 31, 2020, reflecting a 26 percent growth rate compared to the prior year, with non-transactional revenue comprising approximately 67 per cent of the overall 2020 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 were Sidley Austin LLP (the US and Hong Kong), King & Wood Mallesons (Australia), Nagashima Ohno & Tsunematsu (Japan) and SyCip Salazar Hernandez & Gatmaitan (Philippines), with BofA Securities serving as financial advisor.
