A federal securities regulator on Thursday struck down the proposed $20 million acquisition of a Chicago-based trading hub, the Chicago Stock Exchange, by a Chinese-owned company.
The Securities and Exchange Commission said it blocked the deal because of a lack of transparency in the details, including an inability to identify who exactly would control the exchange.
The proposed deal, in which a subsidiary of the Chongqing Casin Enterprise Group was to buy the exchange, drew sharp criticisms from Republican and Democratic lawmakers, who said it could put the security and stability of United States financial markets at risk.
President Trump has railed against the proposed acquisition. During a presidential debate in South Carolina in 2016 after the deal was announced, he said: “China bought the Chicago Stock Exchange — China, a Chinese company. They are taking our jobs. They are taking our wealth. They are taking our base.”
Lawmakers applauded the S.E.C.’s action on Thursday.
“This has been a long fight, and I am grateful that we have a president who recognizes the security threats from Chinese government-affiliated ownership of the Chicago Stock Exchange,” Representative Robert Pittenger, Republican of North Carolina, said in an emailed statement. “Recall, the Obama administration was misguided and fully endorsed this transaction.”
Other Chinese-backed deals have come under scrutiny, including a partnership between Goldman Sachs and China’s sovereign wealth fund, the China Investment Corporation; a hotel buying spree by the Chinese insurance company Anbang; and an effort by Huawei Technologies to purchase a stake in 3Com, an American maker of internet routers and networking equipment.
Supporters of the Chicago Stock Exchange proposal said it could help bring more Chinese companies to United States financial markets. And it would also have helped revive a marketplace where activity was dwindling. The Chicago Stock Exchange handles only a small fraction of the stock trades that take place every day.
A spokesman for the Chicago Stock Exchange declined to comment. Representatives of Chongqing Casin could not be reached for comment.
The proposed acquisition had been approved in late 2016 by the Committee on Foreign Investment in the United States, which reviews deals for national security concerns. The deal had been recommended for approval by the S.E.C. staff, but was delayed by the chairman, Jay Clayton, a Republican and a Trump appointee.
In its decision to reject the deal, the S.E.C. said the proposal left too many unanswered questions about who would ultimately have control over big decisions at the exchange. The S.E.C. said it was also not sure it would have access to the exchange’s books and records after the deal.
The commission said it did not consider broader criticisms of the deal’s potential impact on market security or whether Chongqing Casin had ties to the Chinese government. In an order made public on Thursday, the commission said it was “not necessary” to consider those concerns, because the structure of the deal itself was problematic enough on its own.