The Australian Securities Exchange (ASX) and Singapore Exchange (SGX) suspended trading in their shares within hours of each other today. The ASX cited talks of a possible merger as the cause of its suspension.
In a letter to its regulator, the Australian Securities and Investments Commission (ASIC), ASX company secretary Amanda Harkness requested that trading be halted for two days or until the exchange receives a request to lift the halt. “A party has recently re-activated confidential discussions with ASX concerning a possible business combination. ASX believes that the discussions remain confidential but in light of the potential for speculation is concerned to manage its disclosure obligations,” it said.
The letter added that an announcement on the progress of merger discussions – which would lift the trading halt – was expected. At 13.21 Australian local time (03.21 BST) ASIC confirmed that trading in ASX shares had been suspended pending the announcement.
At 12.52 Singapore local time (05.52 BST) SGX's company secretary, Joyce Fong Foong Chao, then requested a trading suspension of the exchange's shares from 14.00 also pending release of an announcement. Neither exchange offered further comment.
The news came as SGX launched trading of American depository receipts (ADRs) and announced plans to offer companies the opportunities for cross-listing with exchange group Nasdaq OMX. Companies currently listed on both the US Nasdaq Stock Market and SGX will have the option to cross list and there will be dual listing opportunities for new IPOs under the agreement. The firms said that the initiative would allow better price discovery and trading opportunities in the Asian and US time zones.
Trading of ADRs has been launched for 19 US-listed Asian companies. The SGX-quoted ADRs, which include names such as Baidu, Ctrip.com and China Mobile, are fully fungible with US-listed ADRs. The ADRs can be bought and sold on the SGX GlobalQuote order book during SGX trading hours and on US exchanges during US opening hours. The cross-border transfer facility for ADRs between US central clearing house the Depositary Trust and Clearing Corporation and Singapore's clearer, CDP, is available. An ADR inventory has already been transferred into CDP.
SGX has been expanding its international reach in recent months. On 4 October 2010 its pan-Asian dark pool Chi-East, a joint venture with alternative venue operator Chi-X Global, got regulatory approval to go ahead. It is expected to launch in mid-November 2010 and has plans to trade Australian shares amongst others.
ASX recently voiced concern that competition from other exchanges threatened the stability of the Australian market. Both firms are working with Nasdaq OMX to develop high speed trading platforms. SGX, is investing S$250 million (US$195 million) into its project ”Reach' which it expects will reduce the roundtrip trading time for users to below 250 milliseconds. The co-location service is expected to launch in Q1 2011. ASX likewise intends to implement a new trading system, ASX Trade , to reduce trading latency and increase trade processing capacity by Q2 2011.