Singapore Exchange Ltd (SGX), blocked by Australian regulators in its takeover of ASX Ltd, is prepared to discuss a merger with other bourses such as Hong Kong, according to Singapore Exchange president Muthukrishnan Ramaswami.
The exchange isn’t currently working on a “transformational deal,” and is focusing on expanding its clearing services for derivatives, growing company listings and finding collaborative agreements that drive revenue, he said in an interview on Sunday at the World Federation of Exchanges IOMA/IOCA conference in Mumbai, India.
“If Hong Kong came to us and said: ‘Shall we merge?’ we wouldn’t say no at all,” Ramaswami said. “Hong Kong would bring us size. We have no problem being a junior partner, but it would be all about the detail.”
There has been no approach or discussion to date, he said.
Singapore Exchange, operator of the city-state’s securities and derivatives markets, had an A$8.3 billion (US$9.1 billion) offer to buy ASX rejected by the Australian government on April 8. The deal was an attempt to compete with rival exchanges in Tokyo and Hong Kong, where a record US$58 billion was raised in equity offerings last year.
Hong Kong Exchanges & Clearing Ltd, the world’s largest listed exchange operator by market value, on March 2 posted its first annual profit gain in three years, as initial public offerings reached a record. Net income rose 7 percent to HK$5.04 billion (US$650 million). On April 19, Singapore Exchange said third-quarter profit fell 10 percent to S$67 million (US$55 million) on costs linked to its attempt to buy ASX.
Even accounting for the failed Australian deal, exchanges have announced takeovers totaling about US$20 billion since October as competition forced chief executive officers to seek to cut costs by expanding into new markets.
Deutsche Boerse AG agreed to a US$9.5 billion purchase of NYSE Euronext that would create the world’s largest exchange operator. London Stock Exchange Group PLC said it would acquire Canada’s TMX Group Inc, owner of the Toronto bourse.
NASDAQ OMX Group Inc and IntercontinentalExchange Inc announced a rival offer for NYSE Euronext, which the company’s board has twice rejected.
SGX chief executive officer Magnus Bocker, who stitched together eight European stock markets and sold them to NASDAQ four years ago, became president of NASDAQ before joining the Singapore bourse. He boosted trading with the introduction of 19 US depositary receipts of Chinese companies in October and announced a S$250 million order processor that may be the world’s fastest when it goes live in August this year.
“We think we can continue to grow,” Ramaswami said. “That’s why we aren’t searching desperately for a partner. We are not in a rush.”
Hong Kong said it might seek strategic alliances with organizations such as technology providers and “regional and global counterparts” as part of its plan for 2010 to next year. Hong Kong has a market value of HK$191 billion, while Singapore Exchange’s is S$8.4 billion.
“We collaborate with them on a number of things, but we’ve never had a ‘should we merge?’ conversation,” Ramaswami said. “We now think collaboration ventures in Asia are more likely than an outright deal. We don’t see an easy deal waiting to happen in Asia.”