ICE’s acquisition of CHX will lead to a new transaction engine while Cboe Global Markets is moving onto technology from Bats, which it acquired in 2016.
The Chicago Stock Exchange (CHX) will become part of the Intercontinental Exchange (ICE), owner of the New York Stock Exchange (NYSE), and the acquisition will pave the way for the CHX’s usage of the NYSE Pillar trading technology, officials say.
The merger is slated to close during the second quarter of 2018, officials say.
ICE is comprised of global exchanges and clearinghouses, and offers data and listings services while the CHX offers trading, data and corporate listings services.
The CHX, a part of the National Market System, offers features that support transactions via NYSE, AMEX, NASDAQ, and other national securities exchanges, officials say. CHX touts itself as “an ideal venue for hedge funds, options market markers, quantitative traders, professional traders, and active individual traders.”
Officials decline to disclose the financial terms of the acquisition, which will need regulatory approvals. The financial impact is not expected to be “material to ICE or impact capital return plans,” officials say.
If approved, CHX will operate as a registered national securities exchange and will benefit from the deployment of the NYSE Pillar trading technology in ICE’s Chicago data center, officials add. NYSE Pillar will also provide additional functionality for the institutional equity brokerage community in Chicago.
The NYSE Group rolled out the Pillar matching engine in May 2016 via NYSE Arca, officials say. NYSE Pillar was described as a “new integrated trading technology platform” that will serve as a connection to equities and options markets through a single specification.
“On July 24, 2017, NYSE American successfully launched a new market model on the NYSE Pillar platform,” officials say. “On August 21, 2017, NYSE Arca introduced new NYSE Pillar gateways, marking the harmonization of NYSE American and NYSE Arca technology platforms.”
The NYSE Pillar platform is intended to connect end-users to NYSE, NYSE American, NYSE Arca, NYSE Arca Options, NYSE American Options, Global OTC and NYSE Bonds through a single specification, gateways and matching engines, officials say.
In a parallel move last week, Cboe Global Markets, which bought the Bats exchange for $3.2 billion last year, announced that it is migrating its Cboe Options Exchange to the company’s proprietary Bats technology on October 7, 2019.
“The planned migration of Cboe Options Exchange to Bats technology follows similar migrations for Cboe Futures Exchange (CFE) and C2 Options Exchange,” officials say. “CFE was successfully migrated to Bats technology on February 25, 2018, while the planned migration of C2 Options Exchange is on track for May 14, 2018. Upon completion of the planned Cboe Options Exchange migration, all of the company’s equities, options and futures markets will trade on proprietary Bats technology.”
The Cboe Options Exchange offers trading via a hybrid market model “that integrates electronic and open outcry trading,” Cboe officials say. “The company is modifying its technology to incorporate concepts of Cboe’s Hybrid market model and replace the current Cboe Command Hybrid trading system. There are no current plans to close the Cboe Options Exchange trading floor.”
Beyond the ultimate migration date, Cboe officials announced three key dates for the Cboe Options migration:
- By Nov.16, 2018, Cboe plans to make available the technical specifications for the Cboe Options Exchange migration;
- On Feb. 1, 2019, Cboe plans to begin accepting new physical connections to the new Cboe Options platform. Cboe Options Exchange will have dedicated network infrastructure and customer connections, separate from the company’s other U.S. equity and options exchanges;
And on March 1, 2019, Cboe expects to begin the certification period for customer testing.