Exchange mergers in Asia will be difficult to achieve in the near term as markets in the region are in various stages of development and have different rules, said Magnus Bocker, chief executive of Singapore Exchange Ltd.
Bocker, who stitched together eight European stock exchanges under OMX and later merged the combined entity with Nasdaq, led the Singapore bourse operator’s unsuccessful bid for Australia’s ASX Ltd. Australian Treasurer Wayne Swan rejected the A$8.4 billion ($8.9 billion) offer on April 8, saying the deal was not in his nation’s interest.
“Exchange mergers in Europe were driven by regulations,” Bocker said at a conference organized by the Investment Management Association of Singapore in the city. “After the monetary union was created, Europe needed to make the market more efficient to compete with the U.S. Asia is a lot different as each country has varied stages of development and rules.”
Pressure on rival exchanges to consolidate is increasing as the fight to attract global capital intensifies. This year, Europe’s Deutsche Boerse AG and NYSE Euronext agreed to merge, while London Stock Exchange Group Plc said it would buy Canada’s TMX Group Inc. Swan said in April that Singapore Exchange’s proposal was not a merger but a takeover that would see a competitor takeover ASX.
Exchange mergers in Asia will be difficult in the near term, as they are seen as national assets or public utility, Chief Strategy Officer of the Stock Exchange of Thailand Veerathai Santiprabhob said in Tokyo today.
“In the West, there have been many exchanges in a country for a long time but in Asia, it tends to be one exchange per country, set up by special commissions with heavy government involvement,” said Veerathai. “That’s why exchanges have been perceived as national utilities or assets.”
A merger of the Singaporean and Australian bourses would have created the world’s fifth-largest bourse, helping the combined entity attract more business away from Hong Kong Exchanges & Clearing Ltd., the world’s most profitable exchange. Since the deal was announced in October, exchanges worldwide have announced mergers valued at about $20 billion.
Singapore Exchange was aware that the ASX deal, which required approvals from foreign investment and competition regulators as well as parliamentary support to change a law that limited ownership of the bourse by single shareholders to 15 percent, carried a “big political risk,” Bocker said. “We took a chance because ASX was a fantastic opportunity.”
The Singapore Exchange remains open to merger opportunities although its priority is to grow its existing business, Bocker said. “There’s so much more to do in Asia. We need to focus more on improving efficiencies rather than think about mergers.”