Australian regulators will have their hands full scrutinising the $8.4 billion mega deal between the country's stock exchange and Singapore, which is poised to emerge as the dominant entity once the takeover agreement reaches realisation, tentatively by the second quarter of 2011.

Under the terms of the takeover deal, the Australian Securities Exchange (ASX) would retain managerial control of the firm but would cede overall supervision, which would be dispensed from the tiny city state following the agreement's formalisation next year.

Soon-to-be departing ASX chief executive Robert Elstone said on Tuesday that both government regulators from the two countries are set to encounter what he called a 'stark choice', yet most likely Aussie regulators would be worried by the fact that the Australian stock exchange would only get four seats out of the 14 available in the new boardroom set up.

The consolation of enjoying a separate management team for both stock exchanges could prove not too comforting for government regulators in Australia, which should mainly compose of the Australian Foreign Investment Review Board (FIRB) and the Australian Securities & Investment Commission (ASIC).

With the deal dictating that the merged stock exchange would be managed by a chairman and a chief executive both based in Singapore, Mr Elstone's start choices pronouncements boil down to the question of protecting the national interests or advancing the global agenda of the ASX, which should be resolved by FIRB and ASIC prior to the deal's finalisation.

Yet both regulators should be able to substantially lean on the support being thrown by the outgoing ASX chief on the controversial merger as he pointed out that "we wouldn't have announced the transaction if the board of both exchanges didn't believe it was in the national interest of both countries to form this combination."

Analysts said that a premium offer of $48 per ASX share tossed by the Singapore Exchange should be a good kick-off for Aussie regulators to contemplate with in picking apart the deal and this can be further bolstered by the jump seen in the local shares, which spiralled up to more than $43 on Monday as against to its $34.96 level when talk were ongoing and trading was halted.

Apart from the necessary ministerial approval, Australian laws limiting to mere 15 percent ownership for any investors wishing to play a major role on ASX would need to be revised and beyond that, analysts believed that Aussie regulators should also consider the likelihood of future stock consolidations in the Asia-Pacific region that could follow the ASX-SGX merger and in turn offer bourse rivalry.

Interested in Foreign Exchange (FX)? Learn more about how Forex works. Avail of the free Foreign Exchange Guide Book from ForexCT by signing up here.