From the May 01, 2011 issue of Futures Magazine • Subscribe!

Australia rejects SGX

First in, first out

Singapore Exchange (SGX) was one of the first to rock the exchange equilibrium last year when it entered into an agreement to acquire the Australian Securities Exchange (ASX), pending regulatory approval. Now, as a number of other exchanges have entered merger agreements, the Australian government has given the SGX/ASX merger a "no-go," leaving some doubt about the state of other mergers.image

The $8.4 billion merger plan that was announced last October hit a wall when Australian Treasurer Wayne Swan confirmed that he planned to nix the deal as not in Australia’s national interest. "Let’s be clear here: this is not a merger. It’s a takeover that would see Australia’s financial sector become a subsidiary to a competitor in Asia," he said. "The deal just doesn’t stack up whatever yardstick you use."

While the ASX board has said they will continue to explore partnership opportunities with SGX, the outcome has left doubt over the outcomes of other exchange mergers that currently are in the works, particularly the proposed acquisition of TMX Group (TMX) by the London Stock Exchange (LSE).

"The chances have increased that [the LSE/TMX] deal will not be allowed to happen based on what happened in Australia. It’s one of those things where domestic pressure will be to do the same, even though in the long-run it is easy to argue that TMX being bought by LSE would be a good thing," says Paul Zubulake, senior analyst at
Aite Group.

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