The sale of the Chicago Stock Exchange is big news all on its own. That it’s being sold to foreign investors makes the news a little bigger. When it turns out the sale is going to be to investors from a communist country where the state has its tendrils in numerous ostensibly private businesses, well..that’s when things get interesting.
With the exchange’s proposed sale to Chinese investors, some lawmakers are wanting an investigation into the transaction to make sure we don’t get any nasty surprises about who is really making the deal.
More than 40 lawmakers are calling for an investigation into the China’s Chongqing Casin Enterprise Group’s purchase of the Chicago Stock Exchange, citing concerns that the takeover could allow the Chinese government to manipulate U.S. equity markets.
“While it is unclear the level of influence the state holds over CCEG, the firm is involved in a number of important Chinese sectors that would likely require close ties to the state,” 45 Republican House Members and one Democrat wrote in a letter dated Tuesday to the Treasury Department’s Committee on Foreign Investment in the United States (CFIUS).
“Additionally, the chairman of CCEG, Shengju Lu, holds a seat on an important industry committee overseen directly by the mayor of the Chongqing Municipality – implying a direct political connection,” it added.
According to the lawmakers, if the transaction were allowed to proceed, it would be the first time a “Chinese-owned, possibly state-influenced” was granted had access to “the $22 trillion U.S. equity marketplace.”
The group, led by Rep. Robert Pittenger (R-NC), is requesting a “full and rigorous investigation” of the acquisition. In their letter, the lawmakers cited transparency concerns about CCEG and the Chinese government, arguing that the takeover could represent a security concern.
We get it. While this is hardly the New York Stock Exchange, it’s still a sizeable exchange. A foreign power able to exert control over U.S. financial markets is a bad thing, but if that power fiddled with the exchange a bit, the results could be dire.
That’s not to say it will happen. It’s probably not even likely to happen. China’s economy is currently tied to the U.S. economy, so it’s not necessarily in their best interests to undermine it. Whether that will always be the case or not, however, is a different matter entirely.
And it’s worth noting that none of these lawmakers seem to be calling for blocking the sale outright. Not yet, anyway. Instead, they’re wanting answers, and that’s hardly unreasonable.
After all, Chinese companies don’t operate in the open like most western companies are forced to. The answers to the lawmakers’ questions would be available with a Google search if this were, say, Berkshire Hathaway. Since it’s not, they want the information.
The question is, will they get it?