SGX CEO says no more concessions on $7.7 billion ASX bid
The head of the Singapore Exchange Ltd
Bocker's bid for ASX last year was the first salvo in a spate of merger and acquisitions that has since erupted in the global exchanges industry, but has run into mounting opposition from Australian politicians and regulators.
SGX relaxed its terms for the takeover last month and Bocker heads to Australia later on Tuesday to campaign for the deal, but he signaled the offer would not be changed.
We are not considering further concessions, Magnus Bocker, the chief executive of SGX, said at the Reuters Future Face of Finance Summit.
SGX and ASX want to team up to cut costs, fight growing pressure from alternative trading platforms and avoid being left behind as rivals in North America and Europe get together.
In less than three weeks, Deutsche Boerse announced a bid for NYSE Euronext, London Stock Exchange
To try to overcome opposition to its deal, SGX agreed last month to allow ASX to have an equal number of directors in the merged company as it seeks an agreement to lift a 15 percent cap on foreign ownership and counter calls for the merger to be scrapped. Yet, under the agreement, SGX will still own a 64 percent share after the merger.
Bocker, a 49-year-old Swede who made his mark bringing together seven Nordic bourses to form OMX AB, said he was not contemplating any other mergers or acquisitions.
I don't see myself as a dealmaker. I see myself as an operator. I like building, changing and growing exchanges, he said, before heading to Australia to campaign for the ASX deal.
HONG KONG LIKES ICE
The surge of merger activity has shone a spotlight on the role SGX's larger Asian rival, Hong Kong Exchange and Clearing Ltd <0388.HK>, will play in the consolidation.
HKEx Chairman Ronald Arculli told the Reuters Summit in Hong Kong he was watching moves closer and would love to replicate IntercontinentalExchange's
If I could replicate the ICE model from the old international petroleum exchange, I would do it tomorrow, today, or now, Arculli said.
If you look at the ICE model, it really is an amazing achievement. They have a lot of components and started out small, but now it's got a market cap of $8-9 billion.
The Hong Kong Exchange, the world's largest exchange operator by market value, has been seen as a possible buyer in any acquisition, although the company has previously said it does not have any targets currently.
U.S-based ICE started off as a physical commodities exchange trading energy products such as oil, and later expanded into the derivatives, options and futures businesses through a series of acquisitions.
It has been reported as looking at a rival bid with Nasdaq OMX
CHINA EYED
The HKEx, with its $23 billion market capitalization and $5 billion in cash, is also looking to neighboring Shanghai and Shenzhen for closer co-operation, where some of China's top companies such as the world's most valuable lender ICBC <1398.HK><601398.SS> have a dual listing.
However, current restrictions on China's yuan currency, its closed capital account and hefty valuations on Shenzhen's Nasdaq-style technology board makes any such tie-up difficult, Arculli said.
I think the situation is a bit more complex than that, neither Shanghai or Shenzhen are listed, he said.
Clearly we would keep our ears and eyes open, we would look at developments that are going on in other markets - we do not rule out doing joint ventures or strategic alliances, but we don't see that equity is necessary a component of any possible co-operation, he said.
Seemingly unruffled by the merger mania hitting the exchanges space, he confidently argued his bourse's greatest weakness right now is being so successful.
Riding on China's coattails, HKEx has been the world's biggest IPO market for the past two years.
Buoyed by that growth, HKEx shares have risen about 60 percent from their May 2010 low, giving it the top ranking among exchanges by market value.
I think in some ways our strength may be our weakness - in the sense that people think of Hong Kong Exchange as a must go-to place in Asia, Arculli said.
I get a little worried because you want them to come for all the right reasons and not just because we're flavor of the month.
Arculli doesn't seem to be fazed by much. Before the interview, he accidentally knocked over a freshly poured cup of coffee near his lap.
In less than a minute, he was leaning back in the chair again, mess cleaned up, not an drop of coffee showing on his tailored suit, white shirt, or yellow tie.
He also brushed aside talk of competition from alternative trading platforms such as dark pools, which match stock orders by institutions that are not visible to regular retail investors.
Their business model doesn't seem to propel them to great financial success, he said. While they have been able to gain a modest market share, their impact in Asia hasn't been as significant as the impact in North America and in Europe.
For his part, Ned Phillips, the chief executive of CHi-East, the dark pool joint venture between Singapore Exchange and Nomura's <9716.T> Chi-X, said the consolidation in the exchanges sector was positive.
I think it's good because exchanges are looking at platforms like us and saying we have to be more like those guys - exchanges know they have to be leaner and realize that the trading community wants to have more efficiency at a lower cost, Phillips told the summit in Hong Kong.
Chi-East completed the roll-out of its trading platform for securities listed in Hong Kong, Japan and Singapore in January. (Additional reporting by Alison Leung, Charlie Zhu, Michael Flaherty, Elzio Barreto and Rachel Armstrong in HONG KONG and Raju Gopalakrishnan in SINGAPORE; Writing by Lincoln Feast; Editing by Neil Fullick)
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