SYDNEY: Australia’s stock exchange chief lauded a proposed multi-billion-dollar merger with Singapore’s bourse Saturday, saying the nation was “indebted” to Asia and should seek greater regional integration. Australian Securities Exchange (ASX) CEO Robert Elstone said the $8.3-billion merger was a “natural competitive and regulatory evolution of Australia’s capital markets” as power shifted to Asia.
The bid, announced in October, sparked a strong political backlash in Canberra, where key independent lawmakers questioned Singapore’s human rights and democracy record and argued that the deal would disadvantage Australia.
Elstone said the ASX would “in the near future” release information to counter the criticism and show how the proposed merger “advances Australia’s national interest.” “As a nation we are indebted to the strength of Asia’s industrialising economies and their appetite for our resources — factors that helped us avoid the worst effects of the global financial crisis,” Elstone wrote in The Australian newspaper.
“Yet, despite talk of becoming more integrated with the pan-Asian economy, a transaction to achieve this causes parts of the community to raise the spectre of loss of national sovereignty, without understanding the protection afforded by the existing regulatory framework or the competitive forces that threaten to marginalise ASX if parochialism prevails.” Elstone said the merger would increase the size and diversity of options for investors and reduce costs for listed companies — “an outcome unequivocally in the national interest.” “The need for additional scale and regional relevance makes ASX’s participation in exchange consolidation a mandatory, not an elective, matter for all of its stakeholders, and not just its shareholders,” he wrote.
Though it would be the “first major regional exchange group in the Asian time zone”, Elstone “emphatically” rejected concerns that governance and regulation of the market would shift to Singapore.
“The Australian operations of the merged group will remain under Australian law and regulated by Australian authorities,” he said. The move, scheduled to be completed in mid-2011, aims to create the world’s fifth-biggest exchange with a market capitalisation of about 12.3 billion US dollars as a regional trading hub to rival Hong Kong.
The deal will be reviewed by Australia’s securities, foreign investment and competition watchdogs, as well as the central bank, and must be approved by Treasurer Wayne Swan, who has promised “extensive regulatory consideration”.
Australia’s parliament, where Prime Minister Julia Gillard holds just a one-vote majority in the lower house, will then have to pass a bill that would allow ownership of more than 15 percent of the ASX.
