the chicago stock exchange, seeking to revitalize its business under new foreign owners, has disclosed the investors backing its bid to become a bridge between u.s. and chinese equity markets. the proposed deal to take over a tiny u.s. exchange has drawn outsize interest because nearly 50% of the exchange<u+2019>s parent would be owned by chinese investors. president-elect donald trump criticized the chinese involvement earlier this year as he complained about the erosion of u.s. competitiveness and trade policy. and some lawmakers, including rep. robert pittenger (r., n.c.), have put pressure on the proposed deal, saying it could provide a way for the chinese government to spy on u.s. traders and other market participants. according to a filing posted monday on the exchange<u+2019>s website, the new owners would include a chinese company, chongqing casin enterprise group co., which would own 20% of the exchange<u+2019>s parent company. the filing said other proposed owners include chongqing jintian industrial co. ltd., chongqing longshang decoration co. ltd., and raptor group, the family office of former hedge-fund manager jim pallotta, which also owns part of italian soccer team as roma. raptor is an investor in potamus trading llc, an electronic-trading firm that could become an active participant on the chicago exchange. chinese investors will own 49.5% of the exchange<u+2019>s parent, according to the filing. u.s. investors, the filing said, include jay lu, a u.s. citizen and the son of casin<u+2019>s majority shareholder, as well as anthony saliba, a board member of chx holdings inc. who made a fortune as an options trader in the 1980s. jay lu and his father, shengju lu, would be subject to exchange ownership restrictions that would limit their combined voting power to 20% of the exchange owners<u+2019> shares, even though they would jointly own 39.5% of the holding company. the filing, which describes the corporate structure and governance controls that the chicago exchange would implement, must be approved by the securities and exchange commission. the sec, which has certified foreign ownership of u.s. exchanges in the past, has 45 days to approve the filing after it is published in the federal register. brokers, investors and other interested parties will have 21 days to comment on the proposed deal. <u+201c>i<u+2019>m prepared to fly out and meet with anybody who is interested in learning more about the deal,<u+201d> said john kerin, the chief executive officer of chx holdings. <u+201c>the more informed they are the better this looks.<u+201d> the committee on foreign investment in the u.s., which is led by the treasury department, also must approve the sale. the committee<u+2019>s questions have included whether the chinese government would have influence over the exchange owners, according to people familiar with the matter. mr. pittenger said at a house financial services committee meeting on nov. 15 that his staff had met with sec commissioner michael piwowar about the sale of the chicago exchange. mr. piwowar <u+201c>expressed some of the same concerns regarding the corruption inside chinese firms, as well as their complacency and the lack of transparency within them,<u+201d> mr. pittenger said. mr. piwowar, a republican member of the sec, is expected to become its acting chairman after mary jo white, steps down on jan. 20. the exchange expects the committee on foreign investment to give its decision by the end of the year, said james ongena, the general counsel of chx holdings. the chicago stock exchange<u+2019>s management has said the chinese government plays no role in chongqing casin enterprise group. corrections & amplifications: rep. robert pittenger (r., n.c.) said at a nov. 15 congressional hearing that his staff had met with sec commissioner michael piwowar about the sale of the chicago stock exchange. mr. pittenger didn<u+2019>t meet with mr. piwowar as incorrectly reported in an early version of this article. (nov. 29, 2016) write to dave michaels at dave.michaels@wsj.com and william mauldin at william.mauldin@wsj.com
chicago stock exchange reveals chinese investors seeking to buy trading outpost  - wsj
dave michaels william mauldin