ACCC Questions ASX SGX Merger, Chi-X Connection

The Australian Competition and Consumer Commission, ACCC, Australia’s competition watchdog has questioned the $8.2 billion takeover bid by Singapore Exchange of Australian Securities Exchange (ASX:ASX) could hinder the entry of competing trading platforms into Australia.

The ACCC review will examine the takeover deal's impact on "the development of competition between exchanges and associated products or services." The review will look at whether a merged SGX and ASX would stall and impact of companies such as Chi-X Australia and Chi-East which is a planned joint venture between SGX and Chi-X.

Chi-X is planning to provide and run "lit pool"which would provide investors and traders an alternative trading platform to the ASX. Chi-East plans to offer a dark pool to institutions such as fund managers and stock brokers to anonymously place and match large buy and sell orders anonymously for stocks listed on multiple exchanges such as Hong Kong, Singapore, Japan and Australia. Both entities have agreed to not compete and Chi-East will operate if the ASX-SGX takeover succeeds or not.

The ACCC review is separate from the Foreign Investment Review Board review, which will assess the takeover on national interest grounds. ACCC will rule by January 27 and the deal expected to go for a vote to shareholders in March 2011 provided it is approved by the Australian treasurer and Parliament.

On October 25, 2010, Singapore Exchange offered to takeover Australia's ASX for $8.4 billion in a cash and share deal that would create the world's fifth-largest listed exchange company.