ASX Ltd (ASX) and Singapore Exchange (SGX) have agreed to mutually terminate the merger implementation agreement entered into on 25 October 2010.

SGX said it was informed this morning that the Australian Treasurer Wayne Swan has rejected the proposed merger of ASX and SGX.

Swan in a statement said “After long and careful deliberations, I have today made an order under the Foreign Acquisitions and Takeovers Act 1975 (the Act) prohibiting the acquisition of ASX Limited (ASX) by Singapore Exchange Limited (SGX).”

The Treasurer said it is in the national interest for Australia to maintain the ongoing strength and stability of its financial system, and he had strong concerns that the proposed acquisition would be contrary to these objectives.

“I have been advised that many of the claimed benefits of this transaction are likely to be overstated,” he said.

“To diminish Australia's economic and regulatory sovereignty over the ASX could only be justified if there were very substantial benefits for our nation, such as greatly enhanced opportunities for Australian businesses and investors to access capital markets.

“Given the size and nature of the SGX –which is a smaller exchange with a smaller equities market than the ASX – the opportunities that were offered under the proposal were clearly not sufficient to justify this loss of sovereignty.”

Meanwhile, SGX said Asia will remain the world’s growth engine in the coming decades.

“SGX, as the Asian Gateway, is well-positioned to leverage on opportunities within Asia’s vibrant and dynamic economies. As Asia’s most international exchange, we will continue to pursue organic as well as other strategic growth opportunities, including further dialogue with ASX on other forms of co-operation.”

On 25 October 2010, ASX and SGX announced that they have entered into a merger implementation agreement to combine to enable customers globally to capitalise on listing, trading, clearing and settlement opportunities created through the expanded platforms, leveraging on the importance of Asia Pacific as the driver of global growth.

The Australian competition and Consumer Commisson ( ACCC) notified ASX that it does not propose to intervene in the ASX-SGX merger proposal in December last year.

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