Singapore ASX deal needs careful consideration, says Weldon

NZX chief executive Mark Weldon. Photo / Mark Mitchell

Stock exchange operator NZX will have to carefully assess the opportunities and threats of the proposed takeover of the Australian Securities Exchange by the Singapore exchange, NZX managing director Mark Weldon says.

"It's very easy to jump to dramatic conclusions whenever there is a major corporate transaction of any kind," Weldon told NZPA.

"In reality, quite often organisations that don't become addicted to deal fever actually do quite well."

There would be pros and cons in having a large competitor next door.

"Whenever someone gets really big there are opportunities in specialisation and in niches, and we'll just have to be careful and assess both the opportunities and the threats."

Singapore Exchange unveiled the agreed A$8.4 billion ($11.1b) proposed takeover offer for Sydney-based ASX yesterday that would create the fifth-largest listed exchange operator in the world.

The merger of SGX and the ASX, Asia's second and third largest listed bourse operators respectively, aims to ward off the threat of alternative trading systems, line up new avenues for growth and cut costs.

The deal would mark the first major consolidation of Asia-Pacific exchanges and is expected to result in $30 million in cost savings.

Asked about the attractiveness of the NZX to companies, if the deal between the Singapore and Australian exchanges went ahead, Weldon said there was already concern in this country at the level of regulation, and the regulatory cost structure from listing on a global platform tended to be very high.

"It's not as simple as saying, 'someone's bigger, they're going to provide a better service'. I think you look all around the world and there are many, many, many cases where bigger is not better," he said.

Large companies, of the size of Nokia or GE, could be listed anywhere, while small companies, historically, tended to attract more capital from local investors.

The question from the perspective of stakeholders was that if there were no New Zealand exchange, why would there be any brokers, or any financial media, and at that point, how well off were this country's small and medium sized listed companies, he said.

Also when companies moved their listings they also moved their head offices.

"People seem to have this fantasy that you can operate without an exchange, and with a whole bunch of head offices, and somehow that's a good thing," he said.

NZX would consider what the best options were for shareholders and stakeholders.

"When the world changes, you obviously have to take account of those changed conditions. Beyond that ... there's no need for us to be too dramatic about it," Weldon said.

There were a range of models and choices that did not always default to being swallowed.

- NZPA