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Singapore, Australia Stock Exchanges Merge

Magnus Bocker (L), CEO of the Singapore Exchange (SGX), shakes hands with Robert Elstone (R), CEO of the Australian Stock Exchange (ASX), in Sydney, 25 Oct 2010

The operators of the Singapore and the Australian stock exchanges have announced a merger that would create one of the largest financial trading markets in the Asia-Pacific.

The combined company, called SGX-ASX Limited, will become the second largest listing venue in Asia for companies seeking to raise capital.

Robert Elstone, chief executive officer of the Australian Securities Exchange, says the merger is unprecedented.

"Yes, there have been cross-border exchange mergers before but never a consolidation arguably involving the East and the West, and moreover, never in a position that this group will be in the fastest region in the world," he said.

The $8.3 billion merger is expected to lower costs for investors and make it faster to trade shares in companies listed on both markets.

Over the past few years, there have been mergers among operators of stock exchanges in Europe and the United States. In Asia, the major stock exchanges have until now remained independent. However, exchanges around the world face increasing competition from new trading systems that use advanced computer technology to make bulk trades for large investors.

Both operators see the merger as aimed at capturing growth in the Asian capital markets. The merger will have the world's second largest concentration of resource companies and offers the most diverse range of derivatives contracts - complex investments designed to track the performance of other assets - in Asia.

"Singapore has a strong financial hub position today. It's a question to continue to grow and not become irrelevant," said Magnus Bockner, the chief executive officer of the Singapore Exchange. "It's obvious for both of us the importance of not to sitting still."

The merger is subject to regulatory approval in Singapore and Australia, but ASX chief Elstone says he is confident the merger will get the green light.

"I don't think we would have announced it if we didn't believe that the approvals will be forthcoming," he said.

ASX shares rose about 20 percent, but shares of the SGX fell about four percent in mid-day trading. Other Asian stock markets had little reaction to the merger news, with most major indexes higher.