CBOE Holdings has confirmed its plan to buy Bats Global Markets for a total of approximately $3.2 billion, with trading across all asset classes expected to migrate onto a single platform utilising Bats’ proprietary trading technology. The transaction is expected to close in the first half of 2017, subject to regulatory approvals.
While the Bats-owned Hotspot FX business is not expected to be materially impacted, the combination of CBOE’s futures platform and Hotspot’s spot FX products creates a unique opportunity, Chris Concannon, Bats’ CEO, told Profit & Loss on a media call.
“It’s a unique opportunity for us to combine an FX platform, which is a global platform, that will include FX swaps, forwards, NDFs and its current spot position with a future’s exchange,” Concannon adds. “The opportunity we have with the future’s exchange in combination with our FX business is a wonderful opportunity when we put those two platforms together.”
Bats bought Hotspot FX from KCG Holdings in 2015 for $365 million and has since embarked on a “very aggressive roll-out” of derivatives onto that platform, according to Concannon.
A forward product is expected to be rolled-out this quarter and the holding company also recently acquired Javelin, adding a SEF platform to the group, which allows for the future rollout of NDFs as well.
The transaction is expected to significantly expand CBOE’s product line across asset classes, broaden its geographic reach with Bats’ pan-European equities and global FX positions and diversify its business mix with significant non-transactional revenue streams, CBOE said in a statement.
Following the close of the transaction, Edward Tilly, CBOE Holdings CEO, is expected to remain as CEO of the combined company, while Concannon will become president and COO, succeeding Edward Provost, CBOE Holdings’ current president and COO, who plans to retire at that time.
If successful, the newly combined company’s corporate headquarters will be located in Chicago, with business offices in Kansas City, New York and London.
“The acquisition of Bats is expected to strengthen our position as a global leader in innovative tradable products and services, and is a transformative next step in our growth strategy,” says Tilly. “CBOE Holdings and Bats share a culture based on the goal of efficiently utilising innovation to better serve customers and the broader marketplace, while enhancing stockholder value.
“We expect the acquisition to enhance the trading experience by streamlining access for customers and to allow CBOE Holdings to provide greater scale, while significantly increasing operational and cost efficiencies,” he adds.