The London Stock Exchange Group is in talks with exchanges in Singapore and Australia to trade shares listed on each others’ bourse, the Financial Times reported, citing unidentified people familiar with the matter.
LSE last week agreed to buy clearing house LCH.Clearnet Group, and that business would clear Singapore stocks traded in London and UK stocks traded on the Singapore Exchange, the newspaper reported. The London-listed exchange is in talks for a similar agreement with ASX, which runs Australia’s main bourse, according to the report.
“It is a well known fact that we are always open to opportunities to grow SGX as the Asian gateway,” Joan Lew, a spokeswoman for Singapore Exchange, said today in an e-mail. “We do not comment on market speculation.”
ASX is considering offering trading in stocks listed on other exchanges, although hasn’t decided on specific securities or locations, said Matthew Gibbs, a spokesman for ASX. He declined to comment on the Financial Times report.
Stock exchanges from London to Sydney are looking at ways to expand their business after having proposed mergers rejected last year.
An $US8.8 billion bid by Singapore Exchange for ASX collapsed after Australian Treasurer Wayne Swan said the deal wasn’t in the national interest.
LSE scrapped its $US3.4 billion bid for TMX Group, owner of the Toronto Stock Exchange, after failing to win support from TMX shareholders.
‘Off the table’
Last year, more than $US37 billion in announced mergers between exchange companies failed to go ahead, according to data compiled by Bloomberg on deals valued at $US1 billion or more.
“In Asia, cross-border mergers and acquisitions are largely off the table,” Sam Hilton, a Hong Kong-based analyst at Keefe Bruyette & Woods, said in a telephone interview today. Anything that provides a “low-cost” way to expand is “incrementally positive,” he said.
The success of the reported LSE plan would depend on the mechanisms of trading and how much it cost the exchange and investors, Hilton said.
He noted that matching buy and sell orders on LCH.Clearnet may lower costs, but without details of how the plan would work, it was too early to tell.
Last week’s announcement by LSE on its LCH.Clearnet purchase led the stock to rally more than it had in eight months.
Tony Weeresinghe, LSE’s director of global development, told Bloomberg News in October about three un-named partnerships to allow cross-trading of stocks on international bourses.
“This will appeal to global investors, allowing people to buy stocks internationally,” he said. Exchanges “can encourage companies to come list and get the best of both worlds. We get to share the trading revenue.”
Weeresinghe said trades would be settled and cleared in the stocks’ home countries while offshore investors would fully own the shares. He declined to name partners pending a formal announcement.
Singapore Exchange has rallied 16 per cent this year and was up 0.3 per cent to $S7.10 as of 11:28 a.m. Singapore time.
ASX rose 0.1 per cent to $31.10 in Sydney today. LSE fell 0.3 percent in trading yesterday, closing at 998.5 pence.