October182011

Asia exchanges say politics means major M&A unlikely


By Rachel ArmstrongSINGAPORE, Oct 18 (Reuters) - Major cross-border consolidation at Asian stock exchanges won’t happen any time soon as political interests mean few governments will be willing to let national bourses fall into foreign hands, senior executives from the region’s bourses said on Tuesday.”The sovereignty of exchanges as a national asset is something that we need to continue,” Dato’ Tajuddin Atan, chief executive of Bursa Malaysia Berhad , said in his speech at the World Exchange Congress Asia.The last decade has seen major consolidation at European and U.S. stock exchanges, driven in part by increasing competition from alternative trading platforms such as Chi-X and Bats Global Markets.But Asia has largely stayed on the sidelines, with Singapore Exchange Ltd withdrawing its bid for Australia’s ASX Ltd in April this year after the government there blocked it.William Barkshire, senior advisor to the chairman of Hong Kong Mercantile Exchange, said this was likely to continue for the next five years.”In the immediate future I see some limited exchange and post-trade consolidation, but largely being only domestic in nature,” he said, speaking in a personal capacity.”It will be a long time before it reaches the extent of consolidation in the west, given political, regulatory barriers, concern over too rapid deregulation following the western financial crisis,” he added.Bourses in South East Asia are due to launch the ASEAN (Association of South East Asian Nations) link, a cross-border trading platform, next year.But Bursa Malaysia’s Atan indicated this is unlikely to be a prelude to full-blown consolidation.”In ASEAN the stock exchanges are the country’s national asset, therefore the sovereignty of the exchange takes priority over its business obligations,” he said.Seth Merrin, chief executive of global trading network Liquidnet, said Asian exchanges needed to think beyond M&A if they want to become global players.”Every investment banker on earth is calling every head of exchange on earth, telling them all the great opportunities they could acquire or be acquired by,” he said.”You’ve got to broaden your strategies, think about other ways you can go global - it’s 2011, the Internet is out there, there’s connectivity.”

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