Chi-X could help NYSE, Nasdaq, bats, direct rim competes with LSE

The bidding war for Chi-X Europe Ltd. shows the growing importance of a comprehensive European strategy for the U.S. exchange operators.

Chi-X Europe, the trading platform in August said he was approached about a takeover has already received offers from the four largest U.S. companies stock, two people with direct knowledge of the matter said yesterday.

NYSE Euronext, Nasdaq OMX Group Inc., bats and Global Markets Direct Edge Holdings LLC have submitted bids to the London-based Chi-X Europe before a deadline next week, according to the people, who declined to be identified because the private deals.

As competition has intensified in the U.S., where up to 50 different places to compete for customers stock brokerage, U.S. companies are looking across the Atlantic Ocean, where only bats Chi-X and all operating platforms region. The acquisition of Chi-X to enable the purchaser to compete directly with the London Stock Exchange Group Plc and Deutsche Boerse AG.

"The four of them have ambitions or a footprint in Europe that could be higher," said Herbie Skeete, Managing Director based in London Mondo Visione Ltd., which advises on trade. "It's easier and cheaper to buy Chi-X to take over the LSE and Deutsche Boerse. It is then an easy way to compete head to head with European bourses and London is a global financial center."

Faster Trading

Chi-X Europe was the electronic market challenge traditional exchanges, offering lower rates and faster trade. The deals are the next step in a process that began in August, when Chi-X Europe said it received a "research" on an agreement. This approach was of bats, which operates the U.S. equity market the third largest and second largest European alternative trading system, people familiar with the situation said at the time.

Julia Streets, a spokeswoman for Chi-X, Ray Pellecchia NYSE Euronext, Nasdaq OMX Frank DeMaria and Stacie Fleming, all declined to comment bats.

Chi-X Europe, launched in 2007 to compete with LSE and Deutsche Boerse, has hired investment bank Lexicon Partners Ltd. for the council in September, two people familiar with the situation said at the time. In October, the Nasdaq chief executive Robert Greifeld said the exchange, ie seven Nordic and Baltic stock exchange and U.S. equity second, is willing to consider an acquisition. Chi-X sent an information memorandum to potential bidders, people familiar with the situation said on November 4.

Prices, Strategy

The information package, which contained no assessment was sent in late October, according to three people familiar with the situation who declined to be identified as talks are private. The memorandum contains information about fee Chi-X Europe on the market, profitability, pricing and strategy, including participation in the expansion into other asset classes, in addition to actions, the people said.

Chi-X Europe is partly owned by Instinet Inc., a New York-based unit of Nomura Holdings Inc., and investment banks and dealers, including Credit Suisse Group AG, GETCO LLC, Bank of America Corp. Citigroup Inc. and Morgan Stanley.

Exchanges like NYSE Euronext, LSE, Deutsche Boerse and Nasdaq are looking for ways to regain lost market share to new rivals after European regulators opened the market to competition in 2007. London Stock Exchange in February completed the purchase of a majority stake in Turquoise, another electronic platform owned by a group of banks.