The takeover of the Australian Stock Exchange (ASX) by Singapore Exchange (SGX) was blocked, along with other reasons, because the deal would pose ‘systemic risk’ to the financial system, according to comments from the Australian government.
Jim Murphy, executive director of the markets group at Australia’s Treasury, told a hearing yesterday the risk came from losing control of the clearing and settlement system.
The systemic risk ‘was one of the major stumbling blocks but I think there were other clear reasons or arguments that were negative to the bid,’ Murphy said, according to a report in The Australian.
The proposed merger between ASX and SGX was blocked in April by Australian Treasurer Wayne Swan on the advice of the Foreign Investment Review Board, which advised him that the deal would not be in the national interest.
Murphy said the merger proposal had highlighted the need to look at risks around clearing and settlement, reports The Australian.
If the clearing and settlement system had been separately owned, it would have removed a major obstacle to the deal, Murphy was quoted as saying.
