Singapore-Australia exchange tie up threatens Tokyo; Controversy Grows

Japan's top exchange will seek its own alliances if a planned multi-billion dollar merger of the Singapore and Sydney stock exchanges goes ahead, the bourse's head said in a report Wednesday.

Atsushi Saito, chief executive of the Tokyo Stock Exchange, told the Financial Times that if SGX's 8.2 billion dollar offer for ASX went ahead, it would be not be "a good story" for Tokyo.

"If Japan becomes isolated on the international stage -- that is not good," he said. "There are many options. There could be a combination of TSE and others on an international basis."

Saito's remarks illustrate how the proposed offer by Singapore's SGX for ASX has ruffled the region.

"The consensus (among officials at Asian exchanges before the proposed deal was announced) was that such a thing would be impossible in Asia" due to the differences in culture and sense of values, Saito told the newspaper of the proposed deal.

Saito added that if the deal were to go ahead, it could result in a loss for the TSE, which is SGX's second largest shareholder with 4.9 per cent, the Financial Times said.

"Our shareholdings will be diluted, with our stake falling to about 3.1 per cent. It's possible we'll have a loss of hundreds of millions of yen," he said.

The proposed merger aims to create the world's fifth biggest exchange with a market capitalisation of about 12.3 billion US dollars, although it first needs to pass regulators and a growing political backlash in Australia.

Analysts say sticking points may include the Singapore government's large stake in the SGX, which could raise sovereign ownership concerns, and the board's composition with 11 Singapore representatives and four from Australia.

Source: AFP, 27.10.2010

Controversy grows over SGX’s takeover bid for ASX

The Singapore Exchange’s S$10.7 billion takeover bid for Australia’s ASX Limited faces a difficult road ahead amid political backlash in Australia and shareholder reservations over the deal.

For the transaction to push through, the Australian parliament, currently controlled by a coalition led by the ruling Labour party, would need to lift the 15 percent ownership cap on the ASX bourse. The Australian Treasury could grant a waiver, but the Business Times reports that this could be stymied if any party demands a vote.

Bob Brown of the Greens Party, a key Labour ally, said he was not supportive of the deal given Singapore’s human rights record and the city-state’s execution of an Australian drug smuggler in 2005.

“This is a state that tramples all over freedom of speech, democracy, the rights of oppositions, the ability for public discourse,” he was quoted in a report by the Associated Press. A few other lawmakers also indicated they were inclined to oppose the takeover.

Aside from regulatory approvals, the merger of the two exchanges will also be subject to shareholders’ approvals. But, already, one SGX shareholder has expressed a negative view over the issue.

Under the deal, SGX will issue new shares and pay ASX shareholders a combination of A$22 or S$28.04 in cash and 3.472 new ordinary SGX shares for each existing ASX ordinary share or equivalent to A$48 per share.

Atsushi Saito, chief executive of the Tokyo Stock Exchange (TSE), was quoted by the Financial Times as saying that the transaction could result in a loss for the Japanese exchange, which is SGX’s second largest shareholder with a 4.9 percent stake. He told the UK paper that if the deal were to push through it would not be “a good story” for Tokyo.

Some analysts said the planned acquisition looked expensive. Gabriel Yap, executive chairman of investment firm GCP Global, said the price of A$48 per share “is too high” as it represents 25 times price-to-earnings ratio while the estimated cost synergies and savings at 20% is higher than that achieved in other mergers and takeovers of other exchanges before.

From the point of view of ASX shareholders, “Christmas has come early,” said Yap.

The SGX-ASX deal aims to create the fifth-largest exchange in the world with a market capitalisation of more than US$12.3 billion and to capitalise on opportunities for growth in Asia-Pacific.The press statement on the proposed merger enumerates other benefits.

Source: Fit To Post Singapore, 27.10.2010

BMV Mexican Stock Exchange September 2010 Performance Report

Click here to download  BMV September Performance Report 2010
Source: BMV , 26.10.2010

Mexico’s Scotiabank Inverlat, Automates Mutual Fund Operations with the Charles River Investment Management System

Streamlines workflows; ensures compliance for all local/international securities and debt instruments 

October 21, 2010 – Charles River Development (Charles River), a front- and middle-office investment software solutions provider, today announced that Scotiabank Inverlat, S.A. (Scotiabank Mexico), one of Mexico’s largest banking groups, has implemented the Charles River Investment Management System (Charles River IMS) across its Scotia Fondos subsidiary. The multi-phased project, delivered on-time, is part of Scotia Fondos’ initiative to automate its domestic and international mutual fund (Fondos de Inversion) operation with 16 different portfolio options on a single, consolidated platform.

Scotia Fondos’ users benefit from advanced decision-making and analysis tools, automated portfolio management and trading, and real-time, pre-trade compliance monitoring for all asset classes, including equities, money market, mutual funds, as well as Mexican corporate and government fixed income instruments, such as Bonos, CETES and UDIBONOS. During the initial project, Charles River automated Scotia Fondos’ equity portfolio management and trading operations, as well as compliance monitoring. The second phase consolidated capabilities across the firm’s fixed income operations.

“We required a state-of-the-art system and a vendor with proven experience in supporting the needs of Mexico’s asset managers; Charles River delivered both,” said Ernesto Diez, Director General, Scotia Fondos. “Our portfolio managers can now stay ahead of the market by analyzing and rapidly implementing changes to portfolios. We can also validate that our portfolios comply with all mandates – at any time and for any asset class.”

Support for Mexico’s numerous local market requirements was critical to the project. Charles River IMS allows Scotia Fondos to manage and execute trades for all Mexican government and corporate debt instruments. The firm’s mutual fund traders can also execute stock lending, support repurchase agreements and rebalance against Mexican indices. In addition, Charles River’s open architecture makes it easy for Scotia Fondos to integrate with its proprietary accounting system, as well as back-office providers, such as Bloomberg for real-time pricing, and Mexican Stock Exchange-owned Valmer for risk data.

Charles River IMS supports region-specific security types and associated workflows, including Mexican corporate and government bonds. In the near future, Scotia Fondos will continue with the implementation of Charles River IMS’ advanced derivatives exposure calculations and coverage functionality helping clients comply with Mexican regulations, such as Comision Nacional Bancaria y de Valores (CNBV) rules, by monitoring and managing pre- and post-trade exposure to derivatives instruments. Charles River’s pre-built compliance libraries contain over 1,700 regulatory and general example rules across 35 regulatory bodies of 20 countries, including comprehensive rule libraries for Mexico.

“Charles River offers asset managers in Mexico sophisticated, yet easy-to-use solutions for expanding their operations into new asset classes and markets – delivering a competitive advantage that supports business growth,” said Spiros Giannaros, Vice President of Sales, Americas, Charles River Development.

Charles River supports five client firms in Mexico, and serves over a dozen firms across Brazil, Chile, and Panama.

Source: CRD, 21.10.2010