After two years of effort, the US Securities and Exchange Commission squelched N.A. Casin Group’s attempt to acquire the operator of the Chicago Stock Exchange.

Despite the SEC’s Division of Trading and Markets initially approving the deal on August 9, 2017, the Commission set aside the decision, launched a de novo review, and did not approve the CHX’s proposed rule change.

It also was the first time in recent memory that the Commission overruled its Trading and Markets Division, especially in the way that it reversed the order within minutes of it being issued, a long-time market participant told Markets Media.

“In the words of Cool Hand Luke: ‘What we’ve got here is failure to communicate,’” added the participant. “I wonder if that is what led to getting Brett Redfearn in the door soon after it happened. Clayton needed to get control over that Division in a hurry.”

According to the SEC’s recently published decision, CHX Holdings, the operator of the CHX, did not meet its burden of demonstrating that the proposed rule change is consistent with the Securities and Exchange Act.

“The information before the Commission has highlighted unresolved questions whether the proposed new ownership structure would comply with the ownership and voting limitations, as well as whether certain aspects of the Proposed Transaction undermine the purpose of those ownership and voting limitations,” the SEC stated in its decision. “Nor has the Exchange shown that it would be able to effectively monitor or enforce compliance with these limitations upon consumption of the Proposed Transactions, as it would be required to do so in its role as an SRO under the federal securities laws. And the review process has also raised questions about whether the proposed ownership structure will allow the Commission to exercise sufficient oversight of the Exchange.”

The Commission’s decision did not come as much of a surprise for many in the industry, who noted the current direction of political winds in Washington, D.C.

“About two years ago, then-candidate Donald Trump already was highly and publicly critical of the deal while he was on the campaign trail,” noted Brad Bailey, research director, capital markets division at analysis firm Celent.

However, the industry should not view the Commission’s decision as a shot across the bow regarding foreign investment in SROs, according to Tyler Gellasch, executive director of the industry organization Healthy Markets Association.

“The structure of the deal and the opacity of the ownership, and accountability, likely made this an easy call for the Commission,” he said. “While all potential deals with foreign investors will receive heightened scrutiny, this one seemed particularly unlikely to withstand that test. Going forward, don’t be surprised to see a private equity buyer materialize for the exchange. Whoever buys it is doing so of the license and opportunity, and certainly not for its current market share and revenue.”