BATS and Chi-X tie-up delayed by regulators

The £185m takeover of Chi-X Europe, Europe’s largest alternative equity trading platform, by its rival BATS Global Markets, was yesterday referred to the UK competition regulator for investigation.

The Office of Fair Trading said combining the two trading platforms, the largest for UK equities after the London Stock Exchange, could reduce the number of trading suppliers.

The Competition Commission probe will take at least six months, derailing plans to conclude the deal this year.

The OFT said it had referred the deal on despite seeing only “mixed” evidence that the takeover would affect competition and receiving few objections from market participants.

“We cannot rule out the prospect that such a structural shift in the marketplace would lead to a substantial lessening of competition,” said OFT senior director Ali Nikpay.

It raises questions over whether Chi-X, the larger and more profitable of the two exchanges, would be better left independent. Chi-X Europe chief executive Alasdair Haynes said it would speak to shareholders about the probe. “We will engage with our board and shareholders to ascertain next steps,” he said.