Nasdaq is to acquire Chi-X Canada, an Alternative Trading System for Toronto Stock Exchange (TSX) and TSX Venture Securities, from Chi-X Global.
The acquisition will provide Nasdaq with direct access to the Canadian equities market. The deal is expected to close in the first quarter of 2016, and be accretive to the company's earnings at closing, excluding transaction-related costs.
“This acquisition is an important part of our North American strategy as Chi-X handles about 22% of the order flow of S&P/TSX Composite securities in Canada,” says Hans-Ole Jochumsen (pictured), President, Nasdaq. “The addition of these thriving marketplaces will create a powerful combination for investors.”
The deal will expand Nasdaq’s North American equities trading business beyond the US, where Nasdaq currently operates multiple trading venues in cash equities, options, commodities, fixed income and other financial instruments. The acquisition will ultimately enhance the trading experience for customers by promoting greater uniformity in technology and functionality across US and Canadian trading venues.
“Nasdaq and Chi-X Canada have both demonstrated their commitment to market innovation and efficiency,” says Tal Cohen, CEO of Chi-X Global. “We believe Nasdaq is well positioned to enhance Chi-X Canada’s current capabilities and to capitalise on new product and asset class opportunities, while maintaining Chi-X Canada’s core values of cost-effective and client-driven solutions.”
Chi-X Canada’s two platforms, Chi-X Canada and CX2, are the only equity trading venues in Canada to offer fully-customisable smart order routing to all market centres, and offer two trading models: post-trade attribution and advanced order types. Both also provide trade reporting, risk management tools and direct connectivity.
Subject to customary regulatory approvals, Nasdaq will acquire Chi-X Canada for an undisclosed amount. The acquisition is expected to be accretive to the company's earnings at closing, excluding transaction-related costs, to deliver attractive returns on capital, and should have no material impact on Nasdaq's financial leverage or capital return strategy. It is expected that Dan Kessous, Chi-X Canada CEO, will continue to lead the Canadian equities trading business and the Chi-X Canada team will join Nasdaq.
“This is a significant acquisition for Nasdaq, as Canada’s GDP has grown more than 50 per cent in US dollars, and 16 per cent inflation-adjusted, since 2005,” says Tom Wittman, Executive Vice President, Global Head of Equities, Nasdaq. “We look forward to working with the Chi-X Canada clients to develop new products and services to help them better navigate the global capital markets.”
Over the next twelve months, Nasdaq will work closely with Chi-X Canada’s clients to create a seamless transition to its world-class INET exchange technology.
