Fears of covert Chinese 'manipulation' have cast doubt on Chongqing Casin Enterprise Group's bid to take over the Chicago Stock Exchange (CHX), according to experts, as a group of 46 US legislators have stepped up their campaign to strike down the deal over national security concerns.

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Republican Congressman Robert Pittenger, a member of the US House Financial Services Committee, on Tuesday called into question the Chinese company's motives for wanting control over the 134-year-old American market institution.

"Thoughtful observers of China would concur that an acquisition of a major US asset by a Chinese firm would require Chinese government approval," Pittenger wrote in an op-ed column for Fox News. "Until China discloses more information, we should remain skeptical of their objectives."

"Dominant Role"

Pittenger and 45 other US congressmen are calling on the Committee on Foreign Investments in the United States (CFIUS) to launch a full-scale investigation into the Casin Group's bid to purchase the CHX. 

The proposed acquisition is the first time a Chinese-owned -- "possibly state-influenced" -- firm has attempted to gain access to the $21 trillion US equity marketplace, the legislators said in their letter to CFIUS.

Bloomberg claims the Casin Group did not respond to several requests for comments on the letter, but notes that the company's listed real estate unit has seen its shares rise 27 percent since the CHX deal was made public. 

The company has no ties to the securities industry, and no previous experience in owning an exchange, according to reports.

"Given the lack of transparency in China, we do not know the extent of state influence on this company," wrote Pittenger. "The Chinese government maintains a dominant role in many domestic market sectors."

Political Connection

Analysts have argued that Pittenger's suspicions are overblown, pointing out that the size of the CHX makes it an unlikely target for an attempt to manipulate US markets.  The US Securities and Exchange Commission (SEC) likewise has adequate safeguards to protect US interests in the deal, market experts have added.

"An acquisition of the miniscule Midwestern bourse would give its new Chinese owners an important lesson on the importance of robust disclosure, smart regulation and free capital markets," the financial journalist Rob Cox wrote in an opinion column for Reuters. "That's a good thing."

But Pittenger thinks otherwise, drawing what he claims is a problematic political connection between CCEG executives and a key industry committee under the local government of Chongqing.

"State influence in this matter could allow the Chinese government access to vast amounts of financial data on individuals and institutions, as well as the ability to shut down or alter trading should there be any confrontation between our two countries," the congressman said.

TagsUS-China relations, Chicago Stock Exchange, Committee on Foreign Investments in the US