Trading Technologies’ path to compete against trading software giants like ION and FIS has received continued backing, as its investing partners SGX and CBOE declined to exercise call options to buy the firm. The potential acquisition had been flagged by analysts at BofA.
Trading Technologies (TT) was acquired by private-equity house 7Ridge in 2021. Cboe, a limited partner in the 7Ridge fund, negotiated an exit option that could be triggered either when TT hit pre-set performance goals or from 21 December 2026. Those targets were met in January, meaning Cboe could have exercised the exit option and taken over TT. This option has now expired, which means TT will remain independent as it seeks to take on industry competitors such as ION Markets.
A source close to the firms said, “To develop TT in a direction that was good for the market, 7Ridge set expectations with the other investors via an agreed set of KPIs, based on TT’s development in a direction that would be good for the industry and for the market.”
SGX and CBOE as investors could potentially make their clients’ lives easier and therefore see more business by supporting the development of the system in that way.
“The KPIs they set out were hit at year end, and both SGX and CBOE had a two-month call option at that point.”
7Ridge Investments 3 LP acquired TT in late 2021, in a deal that valued the futures-trading Order Execution Management System (OEMS) at US$500 million. Cboe supplied 40 per cent of the fund’s capital and has treated the stake as an equity-method investment ever since.
Under the partnership agreement, Cboe secured an exit option allowing it, or any other limited partner, to buy 100 % of TT once the business either satisfied defined revenue and profitability hurdles or after 21 December 2026. Cboe’s latest 10-K filing described the mechanism in detail, noting that if the LPs decline to exercise, 7Ridge can put TT up for sale to a third party instead.
That clock accelerated in January 2025 when Cboe disclosed that the general partner certified the performance goals have been achieved, and the option became exercisable.
Bank of America analysts highlighted the disclosure in a mid-April note:
“In their latest annual filing, Cboe disclosed that its exit option to acquire Trading Technologies became exercisable in January.”
The report adds that Cboe’s “dry powder spiked 28 % quarter on quarter,” giving the group ample balance-sheet capacity to fund a larger deal after years of sub-US$500 million acquisitions
TT itself has grown rapidly; revenues climbed from US$98 million in 2021 to US$170 million in 2023. OEMS transactions in comparable deals have cleared about seven- or eight-times sales, implying a potential valuation north of US$1 billion if the option was to be exercised at market multiples.
TT’s front end would be a way to deepen institutional use of its flagship SPX index-options franchise, where retail platforms account for about 90 % of customer flow, according to Bank of America analysts. They add that TT’s connectivity to seventy-plus venues and its futures heritage could accelerate that push.
The exchange is simultaneously litigating with the U.S. SEC after the regulator rejected Cboe’s proposal to exempt exchange-affiliated OEMSs from certain reporting rules. “Cboe is now litigating the matter in the Federal court system,” the BofA note reminds investors.
If the Chicago-based group were to have bought TT, it would have marked its first billion-dollar-plus transaction since the BATS Global Markets takeover in 2017. However, CBOE CEO, Fred Tomczyk had announced a focus on organic growth while expressing caution about M&A: “It has to make strategic sense and financial sense and move the needle.”
Cboe, like CME have seen major growth in volume through retail involvements in markets.
Read more: CME chases increased volume in return for lower fees with Robin Hood deal.
Cboe Global Markets, Trading Technologies and 7Ridge declined to comment on the potential transaction.
Correction: this story has been amended to correct inaccuracies in the original version
