Singapore Exchange and the Australian Securities Exchange - Assignment Example

The above proposal of SGX– based on an offer of $8.2 billion – has been considered as an important initiative for strengthening the financial performance of both markets involved (Jakarta Globe 2010); moreover, the local economies will be benefited – both in the short and the long term. The key advantage of the new group – the one resulting from the merge of the above two exchange markets – will be related to the following fact: Australia has significant and adequate resources while Singapore is well known as a powerful marketplace and it is also directly linked with the Chinese market (Jakarta Globe 2010).

It should be noted that the decision of leaders in Singapore’s SGX to propose a merger between their organization and the ASX has caused severe turbulence in the Asian market. The new group, as resulted from the above merger, will be quite powerful. For Australia, the specific merger is related to a series of benefits. At a first level, the resulted group will have a capitalization of about $12.3 billion, i.e. it will be fifth in the list of the most powerful exchange groups worldwide (Jakarta Globe 2010).

Of course, it would be quite important that Australia would keep its control on its market (D. Horsfield in Wen et al. 2010). It seems that such risk is not involved in the particular project; in fact, in the relevant proposal it is made clear that the two markets will remain independent – as separate legal entities – and will be regulated in accordance with the local laws (Laible 2010); in March 2011 the above proposal was changed incorporating the rule that each of the exchange markets will be equally represented in the board of the new organization (Lee 2011).

 In terms of its benefits, the particular merger would lead to the establishment of ‘a single multi-asset platform lowering trading costs and increasing technical efficiencies’ (Laible 2011); the above fact would result to the increase of the number of investors.