June 01, 2022 - Cboe Global Markets, Inc. announced it has acquired NEO, a fintech organization comprised of a fully registered Canadian securities exchange (NEO Exchange) with a diverse product and services set ranging from corporate listings to cash equities trading and a non-listed securities distribution platform (NEO Connect).
NEO Exchange is a next generation stock exchange focused on fairness, liquidity, transparency and efficiency that brings together investors and capital-raisers, serving as a central force driving the Canadian capital markets forward. NEO Connect provides a distribution platform supporting mutual funds, private funds and private corporates.
With ownership of NEO, Cboe expects to provide an enhanced Canadian equities offering, bringing global infrastructure and market expertise to further grow Canada as a hub for global equities trading. In addition to NEO, Cboe's Canadian operations include MATCHNow, the alternative trading system (ATS) acquired by Cboe in 2020, and Cboe BIDS Canada, a Canadian equities block trading venue launched in February 2022. Cboe now holds approximately 15.6% combined equities market share in Canada through the MATCHNow and NEO venues.2
Cboe brings an innovative mindset, economies of scale, market expertise and client distribution that can further propel NEO's growth to benefit the Canadian marketplace. NEO's product alignment with existing Cboe business lines, including MATCHNow and Cboe BIDS Canada, will allow Cboe to leverage its scale, technology expertise and operational efficiency throughout the North American market. Bringing the MATCHNow and NEO businesses under the same corporate umbrella will help allow Cboe to bring increased competition to Canada through a holistic equities offering with market data, access services and listings.
Cboe also expects to expand its global listings strategy by leveraging the unique listings experience NEO has built with companies focused on the innovation economy globally. With access to global resources and platforms, this strengthened offering is expected to improve efficiencies and opportunities for investors and capital-raisers in Canada and around the world.
Ed Tilly, Chairman and CEO of Cboe Global Markets, said, "With NEO, we are creating another connection across borders through our network of trusted markets, enabling Canadian clients to pursue global growth opportunities through innovation, enhanced technology and access to new ways of trading and listing. Our global strategy is focused on developing a seamless experience for our combined customers and I can't wait to work with the entire NEO team to bring greater choice to market participants in Canada and across the globe."
Jos Schmitt, Senior Vice President, Global Listings and NEO President, said, "It is an exciting time to join Cboe, which has grown beyond its options heritage into one of the largest global market infrastructure providers in the world. With Cboe's expertise in operating global equity, derivatives and, most recently, digital asset markets, we have a unique opportunity to not only enhance Canadian markets, but also work together on potential new market data solutions that will integrate data from the U.S., Canada, Europe and other global platforms. The NEO team will be instrumental in helping to grow a global listings offering, leveraging the strength of NEO's existing listings business in Canada. We will continue to put investors and capital-raisers first as we work with Cboe to create an exceptional experience for companies seeking access to liquidity and capital formation globally."
Fully operational since 2015, NEO Exchange is a Toronto-based Canadian stock exchange operator with business lines across listings, trading and market data. Senior Vice President, Global Listings and NEO President, Jos Schmitt will remain as head of the NEO business, reporting to David Howson, EVP, Global President of Cboe. Schmitt will also lead Cboe's global listings strategy. Bryan Blake, Vice President, Canadian Equities, will provide strategic leadership and direction to the transaction side of the NEO business, reporting to Adam Inzirillo, Senior Vice President, North American Equities.
Cboe funded the transaction with existing credit facilities and cash on hand. Terms of the deal were not disclosed, however, the company noted that the purchase price is not material from a financial perspective and expects it to be nominally accretive in the next 12 months.
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