A successful bid by the Singapore Exchange (SGX) for the Australian Securities Exchange (ASX) could have unexpected spin-offs for the NZX, Craigs Investment Partners broker Chris Timms said yesterday.
If the Singapore Exchange was successful in its $A8.45 million ($NZ11.3 million) bid, it would focus more attention on "this part of the world", which could be good for the NZX.
"There has long been talk of us merging or moving across with the ASX. It does make sense. We are rapidly decreasing in size."
Companies looked at listing on a exchange to provide liquidity first but they also wanted to be in a position to raise capital.
Fletcher Building would have realised there would be a limited amount of interest from New Zealand in its bid to buy ASX-listed Crane and used the ASX to launch its bid.
More notice was taken of a larger exchange and companies listed there were likely to trade at higher volumes, Mr Timms said.
The primary reason for listing in New Zealand was to create investment options. At a certain size, dual listing for companies became an option.
As operations outside New Zealand grew, those companies needed to consider where was the best place to be listed.
"A single listing has a lot to do with cost. Multiple exchange listings come at considerable cost but, as the outlook improves, the benefits might outweigh the extra costs."
The Australian Consumer and Competition Commission said the main focus of its investigation had been to determine whether the proposed acquisition would deter the entry of Chi-X Australia or Chi-East.
Chi-X Australia was planning to launch in Australia next year and Chi-East had also applied to operate in Australia.
"Given SGX's 50% 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," ACCC chairman Graeme Samuel said in a statement.
Mr Timms said the ACCC found the extent to which Chi-East and the ASX would compete in relation to "dark pool" trading services was limited.
Several dark pool providers would continue to constrain a merged ASX-SGX, he said.
The two exchanges shared the same technology platform, provided by Nasdaq OMX.
DARK POOL
The dark pool gets its name because details of these trades are concealed from the public, clouding the transactions like murky water. Some traders that use a strategy based on liquidity feel that dark pool liquidity should be publicised, in order to make trading more "fair" for all parties involved.
Source - Investopedia.com
