RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Financial

CBOE in talks to buy smaller rival Bats

Posted on September 23, 2016

A Bats logo sits on an an office window on the trading floor of Bats Chi-X Europe©Bloomberg

CBOE, the US exchange best known for the Vix volatility indices, is in talks to purchase smaller rival Bats Global Markets in a deal that underscores consolidation sweeping through the US options industry, people briefed about the negotiation said.

A potential deal, which would come less than six months after Bats went public, would be by far the largest undertaken by Chicago-based CBOE, which has for years lived with speculation linking it to a combination with its city rival CME Group.

    It is unclear at what stage the talks are presently but one person familiar with the matter cautioned that the negotiation could still fall apart or another player could come up with a rival bid.

    Shares in Bats, which listed in April this year after having botched a listing four years earlier, rose about 25 per cent in post trading hours after Bloomberg first reported the talks.

    Bats and CBOE declined to comment.

    If a deal was concluded, it would create an exchange that competes in futures and options, equities, exchange traded funds and foreign exchange.

    Bats’s European operations run one of the continent’s largest exchanges. The two also have contrasting corporate cultures: Bats has made technology the centre of its operations while CBOE runs one of US’s few remaining open outcry pits, where traders shout across a room to make deals.

    The deal talks come only months after Nasdaq stole a march on rivals with $1.1bn bid to buy the International Securities Exchange from Deutsche Börse, the German exchange.

    The move meant Nasdaq leapt past CBOE to become the biggest operator in a field of 14 exchanges, with a 40 per cent market share. Bats, which also operates options exchanges, has a market share of around 10 per cent.

    It also left CBOE as the only options exchange operator that did not own a cash equities market. Bats is the US’s second-largest share trading exchange, with around a fifth of the average daily market volume.

    The number of options exchanges in the US has soared in recent years with operators catering to the specific needs of options traders, such as speed or price or the priority of the trade.

    Earlier this year Bats unveiled plans to undercut CBOE’s hugely successful Vix volatility indices with its own data. The Vix has become so pervasive and popular with investors that it is sometimes known as Wall Street’s “fear gauge”.