IntercontinentalExchange To Acquire Singapore Mercantile Exchange
Under the terms of the agreement, which has been approved by the boards of directors of both companies, ICE will acquire 100% of Singapore Mercantile Exchange (SMX). This includes the SMX Clearing Corporation (SMXCC), a wholly owned subsidiary of SMX and the clearing house for all SMX trades. The transaction is expected to close by the end of 2013, subject to applicable regulatory approvals and closing conditions.
SMX operates futures markets in Singapore across metals, currencies, energy and agricultural commodities. The Exchange retains licences to operate as both an approved exchange and approved clearing house, providing ICE with exchange and clearing infrastructure in Asia for the first time. Upon completion of the transaction, ICE anticipates there will be a period of business transition in which ICE will implement technology changes and, in consultation with market participants, clearing members, and regulators, will evaluate the product and clearing strategy of SMX to ensure the offering meets market participants’ needs in the region. SMX is a wholly owned subsidiary of Financial Technologies (India) Ltd (FTIL) and is regulated by the Monetary Authority of Singapore (MAS).
David Goone, Chief Strategy Officer, ICE, said: “The acquisition of SMX represents an important step in ICE’s growth trajectory as we look to expand our customer base and markets in Asia by establishing a local exchange and clearing presence. In recent years, Asia-based trading activity in our benchmark energy and interest rate products has been rising as the region increases in importance in global markets. ICE has had a presence in Singapore for over a decade and today’s announcement is a natural evolution of our strategy to further extend our network of markets across the globe.”
Features of the transaction:
SMX and SMXCC will transition from their existing technology to the ICE trading and clearing platforms
SMX members will benefit from ICE’s world class technology and trading platform capabilities which offer industry-leading performance, functionality and stability, and other technological innovations such as ICE Mobile and WebICE, increasing global market access
Singapore is the regional hub for much of the region’s physical commodity trade. Through SMX, ICE will offer regional hedging opportunities for market participants to manage their price risk in a well regulated and transparent environment
Whilst ICE has not taken a decision on new products, opportunities include the potential for a variety of new cleared contracts to serve the Asian commodity and financial derivatives markets
With specialist commodities expertise in trade execution, clearing and physical delivery infrastructure, ICE is well placed to build on the SMX infrastructure and membership base already in place
SMX will continue to be based in Singapore and operate as a separate recognised body with its own independent board of directors, including Ang Swee Tian, the former President of the Singapore Exchange (SGX)