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CBOE Holdings, Inc. (Chicago Board Options Exchange) (NASDAQ: CBOE), the largest US options exchange announced on Monday it has acquired the global stock exchange operator Bats Global Markets, Inc. (BATS: BATS) for around $3.2 billion in cash and stock.
Besides expanding its presence on the global exchange markets, with the acquisition of Bats CBOE is also entering the institutional forex market through Bats’ institutional forex broker HotspotFX.
In its announcement CBOE notes that the transaction will significantly expand its product line across asset classes, broaden its geographic reach with Bats’ strong pan-European equities and global forex positions, and diversify its business mix with significant non-transactional revenue streams. “CBOE Holdings expects to utilize Bats’ leading proprietary trading technology by migrating trading in all of the combined company’s markets onto a single, proven platform,” the company said.
After the completion of the deal, CBOE Holdings expects to incorporate the functionality offered by both technology platforms and migrate onto the proprietary Bats’ system. By utilizing Bats’ technology and the combined customer reach of CBOE Holdings and Bats, CBOE Holdings plans to broaden distribution of its expanded product line to provide greater breadth and depth of products and services.
After the deal Edward Tilly, CBOE Holdings’ Chief Executive Officer will retain his position in the new company, while Bats chief Chris Concannon will become president and chief operating officer.
News of the talks between the two companies and the possible deal first surfaced last week. Since then, according to Bloomberg, the Bats stock price rose 20% to around $31.74 – a considerable rise since its IPO in April when the stock were priced at $19.
The Chicago Board Options Exchange is the largest stock options exchange in the US. It offers over 2 200 companies, 22 stock indices and 140 exchange-traded funds (ETFs). It was launched in 1973 and has had an annual trading volume of around 1.27 billion contracts and an annual volume of almost $580 billion at the end of 2014 (the latest publicly available data). CBOE also offers trading in binary options.
BATS Global Markets is a US-based operator of exchanges and services for financial market. It is headquartered in Kansas City and has offices in New York, London, Chicago and Singapore. The company owns four US equities exchanges – BZX, BYX, EDGX, EDGA, the pan-European stock market – Bats Europe, one US options exchange – Bats Options, and the institutional forex brokerage Hotspot FX, which it acquired in January 2015.