The Singapore Stock Exchange (SGX) has quashed rumours of a potential merger with the London Stock Exchange (LSE) but has left the door open for collaboration in derivatives.
“SGX has not engaged in any discussions with LSE on a potential merger,” read a statement from the exchange. “However, we are open to collaborations and partnerships which may benefit our shareholders and the company.”
Other reports have suggested the two exchanges – both of which have already tried and failed to agree cross-border mergers in the last year and a half – will extend into derivatives a recently announced partnership for equities.
On 11 July, the LSE signed a memorandum of understanding with SGX, providing for participants to trade the stocks of both exchanges across both markets.
Asia-based market participants have largely welcomed the prospect of greater international cooperation by the Singapore bourse.
"A potential tie-up between the LSE and SGX could be a positive move for Singapore in terms of raising the profile of that market and possibly attracting more companies to list there,” said Richard Coulstock, director, head of dealing at Singapore-based asset manager Eastspring Investments. “SGX has continually tried to develop its market through initiatives like the attempted takeover of the Australian Securities Exchange (ASX) and, more recently, the strengthening of its listing rules.”
The two bourses’ previous expansion plans were each scuppered by national interest.
In April 2011, SGX agreed to mutually terminate merger discussions with the ASX after Australian Treasurer Wayne Swan said the deal would see “Australia's financial sector become a subsidiary to a competitor in Asia”.
Two months later, the LSE aborted its plan to merge with Canada’s TMX Group after failing to secure enough shareholder votes to complete the deal. The TMX Group is now close to completing the sale of a majority stake to the Maple Group, a consortium of 13 financial institutions.
Reporting by Sophie Pallier