Two contenders vie for Cboe’s Canada and Australia units, raising stakes for TSX and ASX
Canadian investors could soon see a major shakeup in who runs key trading venues at home and in Australia, as multiple bidders circle Cboe Global Markets Inc.’s exchanges in both countries.
The Canadian Securities Exchange (CSE) is considering a bid for Cboe Global Markets’ securities and derivatives exchanges in Australia and Canada as part of an “ambitious expansion plan,” its chief executive Richard Carleton told Reuters.
According to Reuters, CSE in October finalised the purchase of Australia’s National Stock Exchange (NSX), which lists 51 small- to mid-cap companies, and Carleton said CSE was interested in Cboe Australia because it would “offer more connectivity to brokers in Australia” that could benefit the NSX.
At the same time, Toronto-based Tradelogiq Markets Inc. has also expressed interest in Cboe Canada, The Globe and Mail reported.
Tradelogiq chief executive and controlling shareholder Laurence Rose told The Globe and Mail that the combination of Cboe and Tradelogiq would actually be a more formidable competitor, from a market‑share perspective, to the TSX than Cboe and the CSE would be.
He argued that if Tradelogiq acquired Cboe and became an exchange, there would be three exchange competitors, which he believes would be a better outcome for the market.
Rose warned that allowing the CSE to buy Cboe Canada would leave the domestic market with just two exchange operators, The Globe and Mail reported.
The same article noted that “Tradelogiq is not an exchange, we are an ATS,” and explained that ATS platforms compete to be the venue of choice for buying and selling securities, but unlike stock exchanges they do not directly list those securities.
Cboe put its Canadian and Australian divisions up for sale in October, roughly four years after acquiring them, Reuters reported.
The company decided to sell the Australian business just weeks after Australia’s corporate regulator granted it a licence to list new companies on its local exchange, and Cboe has declined to comment on the sale process.
The outcome in Australia will matter for competitive dynamics there as well.
The Australian Securities and Investments Commission (ASIC) is trying to ramp up direct competition to the Australian Securities Exchange (ASX) in a tough IPO market.
Cboe Australia has 20 percent of Australia’s equity market turnover, representing almost $1.32bn of trades each day, according to regulatory figures cited by Reuters.
Bloomberg reported that Australia’s financial regulator, which approved Cboe Australia’s listing market application in October in an effort to increase competition, is working closely with Cboe’s Chicago-based parent to find a suitable buyer.
Several regional exchanges have been linked to Cboe Australia.
Bloomberg, citing the Australian Financial Review, reported that Singapore Exchange Ltd. held preliminary talks with Cboe and its advisers about a potential offer for the Australian unit.
A representative for Cboe Australia declined to comment, and SGX did not respond to a request for comment outside regular business hours.
Reuters reported separately that the Singapore Exchange said it was not interested in Cboe Australia after local media suggested it was eyeing a deal, while Bloomberg, again citing the AFR, said New Zealand’s NZX Ltd. was also working on an offer.
In the background, Australia’s main exchange, ASX Ltd., faces intensified regulatory scrutiny and calls for more competition.
Bloomberg noted that SGX’s attempted takeover of the ASX was blocked in 2011, with the government at the time citing national interest reasons.
