MAS: Reply to PQs on Proposed Merger of SGX and ASX
Date: For Parliament Sitting On 22 November 2010
Name and Constituency of Members of Parliament
Teo Siong Seng, Nominated Member of Parliament;
Ho Geok Choo, MP for West Coast GRC
Q631 Teo Siong Seng: To ask the Senior Minister if he can explain the rationale behind the planned acquisition of the Australian Securities Exchange by the Singapore Exchange and how it will benefit the local investors in Singapore.
Q633 Ho Geok Choo: To ask the Senior Minister (a) how will the proposed merger of the Singapore Stock Exchange and the Australian Stock Exchange benefit Singapore and Singaporeans; and (b) how will this merger position Singapore as the premier stock exchange in the region.
1. On 25 October 2010, the Singapore Exchange and Australian Securities Exchange, SGX and ASX, announced that they had entered into a merger implementation agreement. They stated that the proposed combination of SGX and ASX would bring together complementary businesses and their respective strengths to serve investors better and leverage on economic growth in the Asia Pacific. They noted that although the ASX and SGX would remain separate legal entities and would be locally regulated, the merger would diversify the product and customer bases of both exchanges. For example, the merger would offer investors access to the second largest listing venue in Asia Pacific with over 2,700 listed companies from 20 countries, including more than 900 natural resource companies and the largest number of REITs and exchange-traded funds in the Asia Pacific. SGX and ASX also said that a combined group will enhance its attractiveness as a partner of choice for future exchange industry collaboration, to tap into strong regional growth.
2. The government cannot judge the commercial merits of the proposed merger. The commercial merits will be decided by the respective shareholders of the two entities. Indeed, the transaction would need to be approved by the requisite majorities of the shareholders of both SGX and ASX.
3. Regulators on both sides would also need to be satisfied that the proposed transaction meets all regulatory requirements in their own jurisdictions. In Singapore, MAS’ objectives as the markets regulator are spelled out in the Securities and Futures Act, as part of its overall mandate of fostering a sound and reputable financial centre. This means that MAS has to be satisfied that the Exchange remains able to maintain efficient and transparent markets, and is able to minimise systemic risks. In Australia, the transaction also needs the approval from the Australian parliament, and would have to pass the scrutiny of the Foreign Investment Review Board.