Sgx Bids for Asx

Abstract

In October 2010, the recently appointed CEO of the Singapore Exchange (SGX) wanted the SGX to grow faster than organic growth alone would allow. The most logical acquisition target was the Australian Securities Exchange (ASX). Executives from the SGX and the ASX announced an agreement to merge. The two exchanges would remain separate legal entities for regulatory purposes but both would be owned by ASX‐SGX Limited, a new holding company that the deal would establish. But why did the merger fail? This left executives at the SGX and other foreign securities exchanges pondering whether the conditions the Australian Treasurer specified for a merger could ever be met and, if so, would a foreign securities exchange really be allowed to acquire the ASX? Excerpt UVA-F-1756 Rev. Jul. 21, 2016 SGX Bids for ASX It was October 2010, and the recently appointed CEO of the Singapore Exchange (SGX) wanted the SGX to grow faster than organic growth alone would allow. Although Singapore was an important world financial capital and a very prosperous city‐state, its small population of 5 million limited potential growth from the domestic economy alone. At the same time, changes in the ownership structure of exchanges, coupled with a shift to electronic trading and increased competition from new trading venues, had sparked a wave of exchange mergers and attempted mergers around the world since the turn of the century. Acquiring another exchange could achieve the SGX's desired growth and realize significant cost and revenue synergies while increasing the SGX's relative importance in a consolidating industry. The problem that the SGX faced was that there were only a few potential acquisition targets in the Asia‐Pacific region, as most countries in the region would not allow a domestic securities exchange to be acquired by a foreign one in a cross‐border merger. . . .