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ACCC approves Singapore's ASX takeover
The competition regulator has cleared the proposed $8.4 billion merger of ASX Ltd and Singapore Exchange Ltd, saying the deal would not impede competition.
The New Lawyer
THE competition regulator has cleared the proposed $8.4 billion merger of ASX Ltd and Singapore Exchange Ltd, saying the deal would not impede competition.
"For the ACCC to oppose a merger, it must substantiate a lessening of competition that results from the proposed acquisition itself. The ACCC found that the proposed acquisition was not the cause of the concerns about access," the Australian Competition and Consumer Commission said in a statement.
In Australia, SGX does not compete with ASX for trading, clearing or settlement services, the ACCC said today.
While the ASX and SGX do compete for listing services, this is only to a limited extent, it said.
ClaytonUtz and Allen & Gledhill LLP confirmed in October they are acting on the proposedmerger. It isunderstood Freehills is also involved in the deal, advising the ASX. ClaytonUtz is acting as legal advisers to Singapore Exchange (SGX) on its proposedmerger with ASX Ltd via scheme of arrangement, announced today. Allen& Gledhill LLP are the Singapore legal advisers for the SGX. ClaytonUtz corporate partners Rod Halstead and Karen Evans-Cullen are the firm's leadpartners, with banking partner Alex Schlosser advising on the financing of thetransaction.
The ACCC focused its investigation on whether the proposed acquisition would deter the entry of Chi-X Australia Pty Ltd (CXA) or Chi-East, because of a joint venture agreement which SGX has with Chi-X Global (CXG). SGX has a 50-50 joint venture with Chi-X Global to establish Chi-East.
Chi-East plans to offer an offshore "dark pool" that will list ASX listed securities. Dark pools provide electronic trading in securities where buy and sell orders are not transparent to the market.
Investors typically prefer to conduct trading in the dark when they are trading large volume of shares, as pre-trade transparency may result in price movements before the trade is completed.
CXG's wholly owned subsidiary CXA plans to establish a lit trading venue in Australia which would compete with ASX. All buy and sell orders are transparent on a "lit pool", the ACCC said.
"The ACCC found that the joint venture relationship between SGX and CXG would not alter CXA's incentives to establish a lit trading venue in Australia and noted that SGX has no economic interest in CXG," ACCC chairman Graeme Samuel said.
"Given SGX's 50 per cent ownership in Chi-East, the ACCC considered that the proposed acquisition may alter the economic incentives of Chi-East to compete with the merged entity. However, the ACCC found that the extent to which Chi-East and the ASX would compete in relation to dark pool trading services is limited.
“Market inquiries indicated that dark pools which are located offshore are unlikely to compete with dark pools located in Australia. Further, there are a number of dark pool providers who would continue to constrain a merged ASX/SGX,” Samuel said.
After extensive inquiries with a range of market participants, the ACCC said that the proposed acquisition was unlikely to result in a substantial lessening of competition.
