According to an anonymous source, Australian Securities Exchange Ltd. (ASX) is in discussions with Singapore Exchange Ltd (SGX) over a possible merger of their stock exchange operations.
The source, who preferred to remain unnamed due to the confidential nature of the negotiations, said that no decisions have been made regarding the clauses of the agreement or the executive hierarchy.
Both exchange operators, which would have a merged market capitalization of around $14 billion, declined to reveal any details by email. They did, however, drop hints by requesting a halt to trading pending “important business talks”.
Newedge Group’s head of Japan unit, Julien Le Noble, commented that “SGX have been looking to strengthen their position in the global financial landscape for some time now. They were in talks to merge with the successful trading house Clarus China Everbright last year which fell through, and it looks like they now want to develop their bourse operations by hooking up with their Australian counterparts.”
Singapore Exchange Ltd’s CEO Magnus Bocker has drawn accolades from the economic community for his forward thinking and unwavering drive towards growth. He helped mediate a merger that created the biggest stock exchange operator on Earth, NASDAQ OMX Group Inc.
The two companies have been pushed into consolidation as competition has heated up over the past year, with Chi-X Global Inc., which trades equities online, looking to complete their regulatory process and rival ASX directly by entering the domestic market.
SGX also has upcoming rivals. The Indian backed Singapore Mercantile Exchange (SMX) has risen to prominence recently and is picking up momentum.
Chris Weston, a floor trader at IG Markets Australia, commented that, “The new firms are here to stay and they are muscling in on the big boys. ASX are being forced into finding creative ways to grow, and these merger talks don’t come as a surprise to anyone. They need to make savings everywhere they can and develop the business”.
The markets saw a 3 percent jump in ASX share prices as the news leaked yesterday before trading was halted ahead of the official announcement that discussions were in progress. SGX shares dipped 2 percent.
An Australian online newspaper reported that the SGX “could announce a merger with ASX in late October”.
Meanwhile, Chi-X Global and the Singaporean bourse announced last year that they had a deal in place to set up Asia’s first exchange-backed private forum for trading securities, or “dark pool”.
