Singapore Exchange (SGX) has been notified by Australia's Foreign Investment Review Board (FIRB) that Australia's treasurer, Wayne Swan, is disposed to reject its proposed merger between Australian Securities Exchange (ASX) because it is contrary to national interest.
Speaking at a press conference Magnus Bocker, CEO, SGX, said that the letter received by SGX “contained no criticism of the proposed structure, nor the governance of the proposed combined entity” and that he believed the deal was in the best national interests of Singapore and Australia.
He also said that Swan had made a further statement clarifying that a final decision had not yet been made, and that the application is still under consideration. SGX says it has been invited to provide further comments to the FIRB, which has 30 days to evaluate the deal from the date that an application is lodged, in this case 11 March 2011. Swan is not a member of the board, and SGX says it will consider appropriate responses.
The SGX/ASX merger deal was signed on 25 October 2010 and would create the world's fifth largest exchange group, with a combined market capitalisation of approximately US$12.3 billion.
On 15 February the two firms established new governance arrangements following a series of meetings with stakeholders, which increased the number of Australian and Singaporean citizens on the combined board to five each, rather than two as previously agreed.
The ASX's trading operations, including listing, trade, execution, data services, clearing and settlement, would be located in Australia and operated by Australian incorporated entities and the fees charged for Australian trading services would be set independently of the fees charged in Singapore. Trading that took place in Australia would continue to be licensed under the country's Corporations Act, with oversight and annual assessment responsibilities retained by national regulator the Australian Securities and Investment Commission and the Reserve Bank of Australia.
Alluding to the recent proposed mergers between the London Stock Exchange/TMX, the Canadian exchange group, and exchange operators Deutsche Börse/NYSE Euronext as well as the Nasdaq/ICE counterbid for NYSE Euronext, Bocker said, “These developments clearly validate the rationale behind the proposed merger between us and ASX in October.”
In a statement the SGX said “We will continue to pursue organic as well as other strategic growth opportunities, including further dialogue with ASX on other forms of co-operation.”