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Competition Commission clears BATS/Chi-X Europe merger

Alan Overd and Rameet Sangha advised BATS Trading Limited, owned by BATS Global Markets Inc, on its anticipated acquisition of Chi-X Europe Limited. Both companies operate Multilateral Trading Facilities (MTFs) which enable market participants such as investment banks, brokers and dealers to trade equities through a single platform as an alternative to trading on national exchanges such as the London Stock Exchange. The CC's investigation has focused on trading in UK equities, in particular intra-day on-book lit trading, which is the parties' main activity, and where the parties face only two principal rival platforms: the London Stock Exchange (LSE) and Turquoise, an MTF which is majority owned by the LSE Group. Despite the fact that the parties face only two major competing platforms for the intra-day on-book lit trading of UK equities, and that these two competing platforms are not entirely independent of one another, the CC has concluded that the proposed transaction will not result in a significant lessening of competition. The CC has found that customers have sufficient power to maintain competition in the market by threatening to take business elsewhere or to sponsor a new competitor in the event that costs were to rise or service quality were to fall post transaction; such sponsored entry has occurred in this sector in the past.

The CC's final report on the merger is available here.

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