– Planned transaction provides Cboe with a meaningful presence in the substantial off-exchange segment of the U.S. equities market
– Complements and expands spectrum of equity trading products, services and solutions available from Cboe’s businesses to enhance customers’ trading experience
– Builds on successful and innovative partnership between Cboe and BIDS Trading, which began with the launch of Cboe LIS in 2016, now one of the largest block trading platforms in Europe
– BIDS Trading to operate as an independently managed trading venue separate from the Cboe U.S. securities exchanges
– Acquisition expected to be immediately accretive to earnings; expected to contribute $0.05 – $0.06 to adjusted earnings per share in 2021
Cboe Global Markets, Inc. (Cboe: CBOE), a market operator and global trading solutions provider, today announced that it has entered into a definitive agreement to acquire BIDS Trading, a registered broker-dealer and the operator of the BIDS Alternative Trading System (ATS), the largest block-trading ATS by volume1 in the U.S., subject to regulatory review and other customary closing conditions.
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The planned acquisition of BIDS Trading will provide an opportunity for Cboe to diversify its U.S. equities offering beyond traditional exchange products and services. BIDS Trading’s proven block trading capability will provide Cboe with a significant foothold in the off-exchange segment of the U.S. equities market, which now accounts for more than 40 percent of overall U.S. equities trading volume. Working with BIDS Trading, Cboe has already employed block trading to great effect in European equities trading through Cboe LIS and ownership of BIDS Trading will provide additional opportunities to expand Cboe’s presence in North American equities. Additionally, BIDS Trading’s differentiated network of global buy-side investment managers and sell-side constituents provides the foundation for Cboe to potentially build more off-exchange products and services in non-U.S. equities or options products and in other geographies beyond the U.S.
“We are pleased to build upon our innovative and successful partnership with BIDS Trading, which began with the 2016 launch of Cboe LIS, now one of the largest European equities block trading platforms,” said Ed Tilly, Cboe Global Markets Chairman, President and Chief Executive Officer. “The acquisition complements our U.S. equities trading business by expanding our presence into the off-exchange space. We are excited by the opportunity to further diversify and expand our equities trading offering and begin competing in this segment of the market. I look forward to welcoming Tim and the BIDS Trading team to Cboe.”
Cboe and BIDS Trading began working together in 2016 to create Cboe LIS, a European equities block trading venue that launched in December of that year. Powered by BIDS technology, Cboe LIS has grown into one of the largest block trading platforms in Europe, with average daily volume of approximately €240 million.
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“The partnership Cboe and BIDS Trading have established in Europe has been very successful and we look forward to joining the Cboe Global Markets family,” said Tim Mahoney, Chief Executive Officer of BIDS Trading. “We believe joining the Cboe family will enable us to pursue additional opportunities that are beneficial to BIDS Trading Subscribers and Sponsored Users as Cboe continues to expand its business across new geographies and reaches new customers.”
The transaction, which Cboe plans to fund with debt, is expected to close in early 2021, subject to regulatory review and other customary closing conditions. Terms of the deal were not disclosed, however the company noted that the purchase price is not material from a financial perspective. BIDS Trading generated approximately $42 million in net revenue over the last 12 months ending June 30, 2020 and is expected to be immediately accretive to the company’s earnings, contributing adjusted earnings per share of approximately $0.05 – $0.06 in 2021.
Cboe expects to maintain the BIDS ATS as an independently managed and operated trading venue, separate from and not integrated with the Cboe U.S. securities exchanges. BIDS Trading Chief Executive Officer Tim Mahoney is expected to remain in his current role and lead BIDS Trading as an independent business within Cboe Global Markets, reporting into an independent committee of the board of Cboe Global Markets.
BIDS Trading was established in 2006 and has grown to become the largest independent block-trading ATS in the U.S., bringing together counterparties to anonymously trade large blocks of shares. BIDS Trading has a long history of deep and broad relationships with buy-side clients. BIDS Trading is based on a broker-neutral model and is open to sell-side firms and their sponsored buy-side clients who can place orders directly into the platform. The company’s highly regarded software, BIDS Trader, has extensive buy-side channel distribution via seamless integration with buy-side traders’ Order and Execution Management Systems (OEMS).
Legal advisors to Cboe Global Markets on the transaction are Davis Polk & Wardwell LLP and WilmerHale, and financial advisors are Goldman Sachs & Co. LLC and Centerview Partners LLC. Legal advisor to BIDS Trading is Morgan, Lewis & Bockius LLP, with Broadhaven Securities, LLC serving as financial advisor.
