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Australia watchdog weighing in on ASX-SGX merger
November 10, 2010 / 9:16 AM / 7 years ago

Australia watchdog weighing in on ASX-SGX merger

MELBOURNE (Reuters) - Australia’s competition watchdog questioned on Wednesday whether Singapore Exchange’s (SGXL.SI) $8.2 billion takeover bid for Australia’s ASX Ltd (ASX.AX) could stall the entry of competing trading platforms into the country.

The controversial deal announced in October sparked an outcry from Australian politicians concerned about a foreign takeover of a crucial component of the nation’s financial system.

The Australian Competition and Consumer Commission’s probe is separate from the Foreign Investment Review Board’s assessment of the deal on national interest grounds, but will provide crucial material for Treasurer Wayne Swan’s final review of the takeover.

SGX’s proposed takeover of ASX comes just ahead of the planned entry into Australia of a new rival to ASX, Nomura’s (8604.T) Chi-X, and a planned joint venture of SGX and Chi-X, called Chi-East.

Launching its probe into the deal on Wednesday, the commission sought comment on whether the merged SGX-ASX could stymie the development of competition between exchanges and trading platforms in Australia.

It specifically asked “whether the proposed merger is likely to impact the proposed entry of Chi-X Australia, Chi-East or other potential suppliers” of platforms for trading Australian equities.

Chi-X is planning to run a “lit pool” in Australia, which would be an alternative transparent platform to ASX, while Chi-East plans to offer a dark pool for brokers and fund managers to place and match large buy and sell orders anonymously for stocks listed in Australia, Hong Kong, Japan and Singapore.

Chi-X and Chi-East have agreed not to compete with each other, and Chi-East will operate whether or not SGX goes ahead with the takeover of ASX.

The competition commission aims to issue its ruling on the SGX bid for ASX by January 27.

The deal is expected to go to ASX and SGX shareholders for a vote in March, if it is approved by Treasurer Swan and Australia’s parliament.

Doubts on the deal going ahead have been weighing on ASX’s share price, which closed on Wednesday at A$37.10, 20 percent below the offer value.

Shares of SGX fell 1.1 percent to S$9.08 after the competition commission released its questions.

Reporting by Sonali Paul; Editing by Michael Perry and Muralikumar Anantharaman

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