SGX weighing options in pursuing overseas tie-ups

Sources say SGX has been in talks with overseas exchange operators such as Nasdaq on potential collaborations, sale of a stake in the company or even a full merger. SGX has pursued tie-ups before. In 2011, its bid for Sydney-based ASX was scuttled by
Sources say SGX has been in talks with overseas exchange operators such as Nasdaq on potential collaborations, sale of a stake in the company or even a full merger. SGX has pursued tie-ups before. In 2011, its bid for Sydney-based ASX was scuttled by Australia's government.ST FILE PHOTO

It held exploratory talks with other operators as industry tries to consolidate even as regulators are blocking deals

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 sources said, asking not to be identified as the details are not public.

SGX, with a market value of about $8.3 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 sources said.

European Union regulators on Wednesday blocked Deutsche Boerse's US$14 billion (S$19.5 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 sources said. It is unclear if any talks are currently active. Representatives for CME, Nasdaq and SGX declined to comment.

Partnering 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.

The company, based in Singapore with offices in China, Hong Kong, India, London and Japan, reported net income of $349 million last year, little changed from a year earlier, on total revenue of $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 last year, according to data compiled by Bloomberg. Still, that is down from US$1.12 billion a day in 2013.

SGX 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 bid for Sydney-based ASX was scuttled by Australia's government. The deal would have created the world's fifth-largest bourse operator at that time.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on March 31, 2017, with the headline 'SGX weighing options in pursuing overseas tie-ups'. Print Edition | Subscribe