Singapore stock exchange and monetary exchange merge

Asian Economic News, Dec 6, 1999

The Stock Exchange of Singapore (SES) merged with the Singapore International Monetary Exchange (SIMEX) on Wednesday, making the country a pioneer in such mergers in the Asia-Pacific region.

The new Singapore Exchange is "the first de-mutualized, integrated securities and derivatives exchange in the Asia-Pacific," a statement from the company said.

By being de-mutualized, members of the exchange do not have to buy and own a seat in the exchange to be able to trade directly, as was the custom in the past.

The new exchange is expected to be listed on the Singapore stock market a few years down the road, industry sources said, but no specific time frame has been announced.

The merger reflects a wider trend in the region for stocks and derivatives exchanges to merge to improve efficiency, develop and offer more products and pool their resources so as to compete and survive in today's more globalized, high-speed electronic trading world.

Many exchanges are also seeking to list in the stock market as a faster way to obtain funds for expansion.

Hong Kong, seen as a fierce rival of Singapore, has also decided to merge its stock and derivatives exchanges next year and to seek a listing.

In Japan, the Tokyo Stock Exchange is planning to change its current organizational structure to become a joint-stock company, while the Australian Stock Exchange was listed on the stock market in October last year.

"The objective of the merger is to enable the new Singapore Exchange to compete efficiently on the world stage," said Lim Choo Peng, one of the two presidents of the new exchange.

The new exchange plans to serve regional capital markets and support Singapore's growth as a leading financial center in Asia. It has adopted a three-pronged strategy of first bolstering the current Singapore-based business, then forging strategic alliances, and thirdly, developing exchange-related businesses.

SIMEX was the first financial futures exchange in Asia when it was established in September 1984. It offered the broadest range of futures and options contracts, covering interest rates and stock indexes.

It was the world's first futures exchange to launch Japanese stock index futures in 1986 -- the Nikkei 225 Stock Index Futures that were the nemesis of Britain's Barings Bank.

The bank collapsed after trader Nick Leeson managed to run up an ultimately untenable position in Nikkei futures. He served time in a Singapore's prison for fraud, Barings was taken over by the ING group of the Netherlands.

The SES was incorporated in May 1973. At the end of last year, there were 307 listed companies, accounting for a total market capitalization of more than 263.16 billion Singapore dollars (156.64 billion U.S. dollars).