Pittenger, others seek probe into Chinese firm’s bid to buy Chicago exchange

Charlotte’s U.S. Rep. Robert Pittenger and 45 other members of Congress are urging the Obama administration to investigate a Chinese firm’s bid to purchase the historic Chicago Stock Exchange.

Chongqing Casin Enterprise Group’s takeover raises concerns about the potential for the Chinese government to improperly manipulate U.S. equity markets, says the letter written by Pittenger, a Republican. One Democrat and 44 other Republicans signed the letter, which was sent Tuesday to the Treasury Department.

“This proposed acquisition would be the first time a Chinese-owned, possibly state-influenced, firm maintained direct access into the $22 trillion U.S. equity marketplace,” the letter says.

The letter says it’s unclear how much influence the Chinese government might have over the firm. Chongqing “is involved in a number of important Chinese sectors that would likely require close ties to the state,” the letter says. It calls for a “rigorous” probe by the Committee on Foreign Investment in the United States, an inter-agency group chaired by the Treasury secretary.

If the foreign investment committee determines Chongqing has a close relationship with China’s government, “and therefore the Chinese military,” it should deny the purchase, the letter says.

Pittenger, who chairs the Congressional Task Force on Terrorism, also serves on the Congressional-Executive Commission on China. Created by Congress in 2000, the commission is tasked with monitoring human rights practices and the development of the rule of law in China.

The Chicago Stock Exchange, a subsidiary of CHX Holdings Inc., is minority-owned by a group that includes Bank of America, ETrade Financial Corp., Goldman Sachs and JPMorgan Chase & Co.

The minority shareholders are also selling their stake, the exchange’s CEO, John Kerin, said when the deal was first reported earlier this month.

A spokesman for Charlotte-based Bank of America declined to comment.

The 134-year-old exchange handles only about 0.5 percent of U.S. stock trading. But the deal, if approved, would give Chongqing a foothold into the world’s largest equity market.

The exchange, though tiny, can influence the entire American equity market.

U.S. regulations require that trades be routed to whatever exchange is quoting the best price for a stock at any given moment. That means activity on the Chicago Stock Exchange could sway the price of virtually any publicly traded company.

Bloomberg News contributed.

This story was originally published February 17, 2016 at 1:15 PM with the headline "Pittenger, others seek probe into Chinese firm’s bid to buy Chicago exchange."