1 Nov, 2020

CBOE Of Dark-Pool Operator BIDS Trading

Chicago-based Cboe (Nasdaq: CBOE) confirmed today that it has completed its acquisition of the dark pool trading stock platform, offered Trading, the largest volume ATS trading block in the United States, for an unnamed price.

The agreement for the alternative trading system (ATS), first announced in October, will allow Cboe to further enter the expanding world of off-exchange trading. The terms of the deal were not disclosed, but the stock exchange operator said the purchase price was not “material”from a financial point of view.”

Cboe plans to fund the transaction with debt and keep the broker registered as an independently managed and operated trading platform.

Bid trading, which generated net sales of bucks 42 million in the past 12 months to September 2020, has attracted interest from rival exchanges. Other foreign exchanges and private equity funds were also interested, as many of them wanted to increase their share in the rapidly growing world of “dark pools”.

The acquisition of the trade Commandments comes shortly after Cboe bought MATCHNow from Virtu Financial. The brokerage-neutral dark pool controlled more than 5% of total stock trading and 65% of anonymous trading in Canada, where shares worth more than bucks 5 billion are traded daily. According to recent statistics, the Toronto-based platform bought and sold about 1.2 billion shares per month and completed more than 2 million transactions.

Cboe Heads off-Exchange with Major Deals

Private trading platforms, which typically target large investors, have a growing market share this year. From a strategic point of view, Cboe stressed that the acquisition of MatchNow and BIDS Trading fits its entire growth strategy and will gain a foothold in the stock trading business it wants to develop.

Ed Tilly, CEO of Cboe, commented on the story: “thanks to our successful collaboration at Cboe LIS, Cboe and BIDS Trading have proven themselves by providing first-rate block trading capabilities to European equities. We are pleased to see Cboe’s reach expand to the U.S. equity market segment by holding shares and expanding our ability to expand to other asset classes and regions.”

Tim Mahoney, CEO of BIDS Trading, added: “We have had a long and successful relationship with Cboe and have enjoyed remarkable success with Cboe LIS in Europe, and we are delighted with the additional opportunities and benefits this acquisition could offer BIDS Trading subscribers and sponsored users. We look forward to being part of the Cboe Global Markets family and continuing to build on our history of successful innovation.”

Dark pools are private electronic trading sites where institutional investors can anonymously trade large blocks of shares without being visible to other traders until they are executed. The anonymity of price tags is designed to help investors trade large blocks of shares without the market moving against them.

In recent years, dark pools have come under increasing scrutiny due to warnings from exchanges and lobby groups. This focuses on the lack of pre-trade transparency, perceived Injustice, and potential exploitation of some dark pool users.

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