SGX (SES:S68) the Singapore exchange, is launching a takeover offer of more than A$6B (US$5.8B) for its Australian counterpart, ASX (ASX:ASX), as early as Monday in a deal that would combine 2 of Asia’s biggest exchange operators.
Shares in SGX and ASX were suspended from trading Friday afternoon, with the Australian Group adding it was in talks about a “possible business combination”.

ASX did not name the party that had “re-activated confidential discussions” but a person close to the situation said Robert Elstone, ASX Chief Executive, had held merger talks with Magnus Böcker, his SGX counterpart.
The deal is a sign that both exchanges recognize they cannot rely on their domestic markets for growth in a region where markets for stock, futures and options trading is growing faster than US and European markets for the first time.

It comes as Asia is seeing share trading fragment away from established national exchanges as nimbler competitors emerge and “high-frequency” players flock to the region in search of trading opportunities.

Such trends have already swept Western markets and have prompted both ASX and SGX to up-grade their trading systems and offer new platforms to cater to these players in recent months. This week, SGX admitted Getco, one of the world’s largest proprietary trading firms, as a member.

The 2 exchanges also share the same technology platform, provided by Nasdaq OMX, the US exchange operator.

Also Friday, SGX and Nasdaq OMX said they had expanded a co-operation agreement and would now allow companies listed on each market to cross-list on the other, as well as providing dual listing opportunities for new initial public offerings.

Mr. Böcker said: “The partnership will bring a wider selection of investment choices to our investors and offer companies access to an enlarged pool of investors. This strengthens our Asian gateway strategy.”

The SGX placed its shares in a trading halt “pending release of an announcement”. It did not make any further comment.

ASX shares rose just under 3% to A$34.96 before trading was halted.—Paul A. Ebeling, Jnr. www.livetradingnews.com