Exchanges explore new ways to collaborate
At one point last year, it looked like the world would be left with just a handful of exchange super-groups.
Merger announcement followed merger announcement, with the odd hostile takeover bid thrown in for good measure.
In the end, however, regulators and shareholders vetoed the proposed tie-ups, leaving the exchanges looking around wondering what to do next.
It seems, according to a recent article in UK newspaper the Daily Telegraph, that merger mania has not quite been extinguished.
The paper reports that the London Stock Exchange (LSE) and Singapore Exchange (SGX) have held a series of ‘preliminary’ conversations about joining forces.
When quizzed by the Telegraph, SGX denied talks were taking place, although it did say it was open to ‘collaborations and partnerships’.
For now, though, full-blown mergers look like a risky option to pursue. Both Singapore and London failed in their bids to link up with the Australian Stock Exchange and TMX Group, respectively, last year.
Instead, the favored option looks to be partnerships, whereby exchanges open up access to each other’s markets.
In this vein, the LSE and SGX have announced they will cross-list their largest stocks.
Under the agreement, LSE members will be able to trade 36 SGX securities on the London exchange’s new International Board.
Meanwhile, SGX members will have the chance to buy and sell FTSE 100 stocks through Singapore’s GlobalQuote platform.
A spokesperson for the LSE says it hopes to bring more exchanges onto the International Board in due course.
Trading of SGX securities in London is planned to start in the third quarter of 2012.
Making London stocks available in Singapore is expected to take a little longer, with trading beginning in the first half of next year, assuming regulators wave it through.
How will this affect the companies in question? The LSE and SGX argue that stocks will attract higher liquidity and also be open to a new raft of shareholders, all without the need for an additional listing.
They add that the affected stocks will be available to trade for around 15 hours a day.
It appears that, despite the failure of exchange groups to complete their desired mergers last year, there will still be big changes in the way stocks are traded around the world.