Trading venue operator BATS Global Markets has been confirmed by market sources as having made an enquiry that could lead to a bid for multilateral trading facility (MTF) Chi-X Europe.
On 24 August, Chi-X Europe said that it had received a letter of enquiry from a privately-owned firm that could lead to an offer to purchase, but since then the identity of the potential bidder has remained unknown.
BATS Global Markets, which operates BATS Exchange in the US and MTF BATS Europe, did not respond to calls regarding the potential bid. Alasdair Haynes, chief executive of Chi-X Europe, offered no comment.
Sources have also said that German stock exchange Deutsche Boerse and exchange group Nasdaq OMX have indicated interest “at the right price”.
Launched by agency broker Instinet in March 2007, Chi-X Europe currently trades around 1,200 of the most liquid securities across 15 major European markets and claims to have achieved profitability to date in 2010.
According to data vendor Thomson Reuters, Chi-X Europe traded €114 billion worth of cash equities in August 2010, giving it a pan-European market share of 17.2% and making it the largest single trading venue on the continent. This included a 24.9% share of FTSE 100 stocks, a 21.8% share of German DAX stocks and a 20.4% of France's CAC 40 index.
By comparison, BATS Europe traded €36.1 billion in August, including 8.4% of the FTSE 100, 5.5% of the DAX and 4.7% of the CAC 40.
As well as agency broker Instinet, which has the largest stake in Chi-X Europe at 34%, some of the platform's most active members also hold equity.
A source close to the situation has told theTRADENews.com that market maker Getco and brokers Credit Suisse and Morgan Stanley, all of which hold stakes in both Chi-X Europe and BATS Global Markets, are keen for the deal to go ahead.
The combination of Chi-X Europe's market share with the faster matching engine of BATS Europe would give the combined venture a significant advantage over the competition. An initial public offering following the merger would also offer a strong exit strategy for all stakeholders. When originally confirming the receipt of the letter of enquiry on 24 August, Chi-X Europe chairman John Woodman insisted that independence remained a realistic option for the firm.