NEO: Cboe to acquire 2nd most active stock exchange in Canada

Rick Steves

The firm expects the deal to drive more trading activity on Cboe markets as well as efficiencies and opportunities for investors and capital-raisers in both Canada and the U.S.

Cboe has announced it has entered into a definitive agreement to acquire NEO, a fully registered Tier-1 Canadian securities exchange.

NEO is the brand name of Aequitas Innovations and its securities exchange boasts a diverse product and services set ranging from corporate listings to cash equity trading.

Cboe chose to buy NEO in order to enhance its Canadian equities offering, which will include a national securities exchange with trading, listings and other services, in addition to MATCHNow, the alternative trading system (ATS) acquired by Cboe in 2020.

The firm expects the deal to drive more trading activity on Cboe markets as well as efficiencies and opportunities for investors and capital-raisers in both Canada and the U.S.

The NEO Exchange is a Toronto-based Canadian stock exchange operator launched in 2015. Its sister company, NEO Connect, provides a distribution platform supporting mutual funds, private funds and private corporates.

Ed Tilly, Chairman, President and CEO of Cboe Global Markets, said: “Adding NEO to the Cboe network better enables us to create a first-class equities offering in Canada, bolstering our global markets in North America, Europe and Asia Pacific, and bringing us one step closer to our vision of building one of the world’s largest global derivatives and securities trading networks.

“With MATCHNow and NEO, Cboe can achieve scale in Canada, creating efficiencies for our combined customers with familiar technology and consistent market models. I look forward to working with the entire NEO team, whose innovative spirit, customer-first approach and drive for change will not only help us grow the NEO business, but also bring greater choice to market participants in Canada and across the globe.”

NEO could serve as base for Cboe’s potential expansion of its successful listings business into other geographies, powering these Canadian companies internationally through global capital raising opportunities.

Jos Schmitt, President and CEO of NEO, said: “We are excited to draw upon Cboe’s core strengths as a leading global market infrastructure provider to further develop innovative solutions that meet the needs of investors and capital-raisers around the world. Our commitment to innovation, fairness and putting investors and capital-raisers first will not only continue under Cboe’s ownership, but now benefit from the strength and support of Cboe’s technology, market expertise and global client distribution.”

NEO is the second most active stock exchange in Canada and provides three market models: NEO-L, a make-take model, NEO-N, an inverted model, and NEO-D, a darkpool.

The Canada-headquartered venue offers corporate, exchange traded product (ETP) and Canadian Depository Receipt (CDR) listings, real-time market data services, a distribution platform for unlisted securities, and an automated workflow supporting private placements.

The transaction is expected to close in the first half of 2022, subject to regulatory review and other customary closing conditions.

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