Exchange operator Cboe Global Markets today announces 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).
Cboe sees the planned acquisition of BIDS Trading as an opportunity 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.
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.
Cboe plans to fund the transaction, whose terms were not disclosed, with debt. The deal is expected to close in early 2021, subject to regulatory review and other customary closing conditions.
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.
Let’s recall that, in August 2020, Cboe Global Markets announced the completion of the acquisition of MATCHNow, the largest equities alternative trading system (ATS) in Canada.