Singapore Bourse Said to Be in Merger Talks With ASX
Singapore Exchange Said to Be in Talks to Combine With ASX
Charles Pertwee/Bloomberg
The company logo of the Singapore Exchange Ltd.
The company logo of the Singapore Exchange Ltd. Photographer: Charles Pertwee/Bloomberg
Singapore Exchange Ltd. is in talks to combine with ASX Ltd., which runs the Australian stock exchange, said a person with direct knowledge of the matter.
The Singaporean and Australian bourse operators, with a combined market value of about $13.8 billion, haven’t determined a final structure for the deal, said the person, requesting anonymity because discussions are private. Matthew Gibbs, an ASX spokesman, had no comment beyond a statement today accompanying a request for a stock-trading halt. Magdalyn Liew, a spokeswoman for Singapore Exchange, whose shares were also halted today, declined to comment.
“SGX has been very active in the past year in developing new products, increasing its distribution network, and in this case strengthening their corporate structure with the potential takeover of ASX,” said Julien Le Noble, chief executive officer of brokerage Newedge Group’s Japan unit. Singapore Exchange Chief Executive Officer Magnus Bocker “is definitely a leading force in SGX’s drive for expansion.”
Bocker, who joined the Singapore bourse in December 2009, was formerly president of Nasdaq OMX Group Inc., the operator of the world’s second-biggest stock exchange that he helped create by combining Nasdaq Stock Market Inc. with Stockholm-based OMX AB in 2008.
New Rivals
A possible merger between the operators of the Asia-Pacific region’s fifth- and eighth-largest stock markets comes at a time when competition is heating up from new rivals. Chi-X Global Inc., an electronic-trading platform, has already won preliminary approval to become a competitor to ASX and is working toward starting Australian operations by March.
Singapore Commodities Exchange, a unit of the Singapore bourse, faces competition from the Singapore Mercantile Exchange, which started operating in the city-state in August. SMX is backed by Financial Technologies (India) Ltd., which operates the largest commodity exchange in India.
“Some of the new kids on the block pose a serious threat to potential revenues and volumes,” said Chris Weston, a Melbourne-based institutional dealer at IG Markets. “ASX needs to find ways to evolve, and tying up with one of the old legacy exchanges would give them ideas, experiences, management and infrastructure at a time when they may have to cut fees and costs.”
ASX shares climbed 2.5 percent in Sydney today before being placed in a trading halt ahead of a “possible business combination,” according to a regulatory filing from the company. Singapore Exchange shares fell 2.8 percent before trading in its shares was halted.
‘Strategic Role’
The Singapore bourse may make a takeover bid for ASX on Oct. 25, the Australian newspaper reported on its website today. The Singaporean bourse and Chi-X Global, part owner of Europe’s largest alternative trading system, agreed in August last year to start the first exchange-backed dark pool in Asia.
“It’s all about economics and the strategic role the SGX is playing in facilitating capital flows,” said Geoff Howie, a senior vice president in Singapore at MF Global Holdings Ltd., a futures and options broker. “Singapore has to find ways to channel rather than control capital flows that arrive on its doorstep.”
Since Bocker took over from Hsieh Fu Hua last year, the Singapore Exchange has announced new initiatives to enhance the bourse’s position as an Asian capital markets hub. The exchange today started trading 19 American Depositary Receipts of Chinese companies to boost trading volumes.
In June, the bourse said it will invest S$250 million in a new trading system that will be the world’s fastest when it goes live in 2011. The following month, Singapore Exchange and the London Metal Exchange said they will introduce cash-settled metals futures contracts by the first quarter of next year year.
Australia’s stock market is worth about $1.36 trillion, more than Singapore’s $554.4 billion, according to data compiled by Bloomberg. Even so, Singapore Exchange is the larger company, with a market value of about $7.84 billion, compared with ASX’s $6 billion.
To contact the reporters responsible for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Joyce Koh in Singapore at jkoh38@bloomberg.net.
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net.
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