SGX said to mull tie-ups with overseas exchanges as deals grow harder

Singapore Exchange has in recent months held exploratory talks about possible tie-ups with overseas exchange operators, people familiar with the matter said.
Singapore Exchange has in recent months held exploratory talks about possible tie-ups with overseas exchange operators, people familiar with the matter said.ST PHOTO: KUA CHEE SIONG

NEW YORK/SINGAPORE (BLOOMBERG) - Even as regulators crack down on yet another round of consolidation among exchange operators, at least one major bourse is still keen to pursue deals.

Singapore Exchange (SGX), which runs South-east Asia's largest stock and derivatives market, has in recent months held exploratory talks about possible tie-ups with overseas exchange operators, people familiar with the matter said.

Discussions with parties including Nasdaq and CME Group have ranged from potential collaborations to the sale of a stake in the company or even a full merger, the people said, asking not to be identified as the details aren't public.

SGX, with a market value of about US$5.9 billion (S$4.23 billion), has been weighing its options as rivals attempt to consolidate across the industry. An outright sale would be complicated as cross-border deals between exchange operators attract intense scrutiny from regulators, the people said. European Union regulators on Wednesday (March 29) blocked Deutsche Boerse's US$14 billion takeover of London Stock Exchange Group, adding to a long history of failed merger attempts between bourses.

SGX has not hired any advisers and no formal decisions have been made about how to proceed, the people said. It's unclear if any talks are currently active.

Representatives for CME, Nasdaq and SGX declined to comment.

Partnering with or acquiring a stake in SGX would give a US or European exchange a stronger footing in Asia as the fight for global capital escalates. SGX - which has with offices in mainland China, Hong Kong, India, London and Japan - reported net income of S$349 million in 2016, little changed from a year earlier, on total revenue of S$818 million.

The average daily value of shares traded on SGX this year was about US$847 million, up 11 per cent from US$763 million in 2016, according to data compiled by Bloomberg. Still, that's down from US$1.12 billion a day in 2013.

The Singapore bourse already has an existing relationship with New York-based Nasdaq, which has a market valuation of US$11.4 billion and runs trading venues in the US, Europe and Canada. Nasdaq sells technology to market operators in 50 countries, and SGX is one of its customers, according to regulatory filings.

In 2011, SGX's A$8.35 billion (S$8.93 billion) bid for Australia's ASX was scuttled by Australia's government. The deal would have created the world's fifth-largest bourse operator at that time.