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UPDATE 1-U.S. SEC puts Chicago Stock Exchange's China deal on hold

(Adds details on SEC decision to review its staff's initial decision; background on the proposed deal)

NEW YORK, Aug 9 (Reuters) - The U.S. Securities and Exchange Commission on Wednesday put on hold a decision by its staff approving the sale of the Chicago Stock Exchange to a group led by China-based investors, giving the regulator more time to mull the politically sensitive deal.

The SEC will vote at a later date on whether to let the decision stand.

The SEC move is not unusual, particularly if the product or deal under scrutiny is controversial or high profile. In May, SEC did not give a reason for its decision to review its staff's initial approval to allow what would have been the first quadruple-leveraged exchange traded fund to come to market.

SEC Chairman Jay Clayton, appointed by President Donald Trump, has not weighed in on the CHX deal publicly.

The proposed sale of privately owned CHX for an undisclosed amount to a consortium led by Chongqing Casin Enterprise Group has drawn criticism from U.S. lawmakers who questioned the SEC's ability to regulate and monitor the foreign buyers if the deal is approved.

To help ease those concerns, CHX on Monday made public statements from all of the investors involved in the deal, saying they "irrevocably submit to the jurisdiction of U.S. federal courts, the Commission and CHX," in a filing to the SEC.

The SEC reviews proposed deals involving exchanges to ensure compliance with federal regulations and that the exchanges can appropriately self-police their brokerage members.

CHX also said its investors would report annually to the SEC on their ownership levels in the exchange, and that CHX would restrict access to sensitive market data to key exchange personnel, who would be prohibited from sharing it with Casin employees.

The SEC decision comes amidst a tougher climate for Chinese-led deals in the United States, with an increasing number of them being blocked under the Trump administration, Reuters reported in July.

The Committee on Foreign Investment in the United States, which scrutinizes deals for potential national security concerns, approved the planned CHX sale in December, prior to Trump taking office.

A rise in cyber security threats and rapid advances in technology make it more difficult to establish whether a deal poses any threat, lawyers who represent companies before CFIUS said in July.

With a market share of less than 0.5 percent, CHX is a niche player in the U.S. stock market, where it competes against 12 other exchanges including Intercontinental Exchange Inc's New York Stock Exchange, Nasdaq Inc and CBOE Holdings Inc-owned Bats.

Still, Casin Group, a privately held company that invests in real estate development and financial holdings, sees potential in the exchange and has said its long-term goal is to list Chinese companies in the United States through CHX, which has locations in Chicago and New Jersey. It also plans to eventually build an exchange in China using CHX technology.

If the deal goes ahead, it would be the first time a U.S. exchange has been bought by Chinese investors. There are also U.S. investors in the group.

(Reporting by John McCrank; Editing by Sandra Maler and Lisa Shumaker)