SGX and ICE signal hopes for closer ties

The prospect of closer ties between two of the biggest exchange groups in the US and Asia has emerged after the chief executives of SGX, the Singapore exchange, and IntercontinentalExchange (ICE) both said they could collaborate with each other on business in Singapore.

The development is a sign that the Asian city-state is poised to expand as a financial centre beyond commodity and foreign exchange trading as western exchanges rush to build infrastructure crucial to tapping trading opportunities in Asia.

Any sign that SGX and ICE can work together not only holds out the prospect of a full-blown merger later, but could complicate efforts by Deutsche Borse, the European exchange group, to pursue its recently announced ambition to build a beachhead in Asia, also from Singapore.

ICE is in the midst of building a new commodity and energy exchange in the Asian city-state out of the former Singapore Mercantile Exchange, which the US operator bought five months ago.

The acquisition marks the first time any western bourse has set up infrastructure in Singapore and has been seen as a competitive threat to the incumbent, SGX, which has a fast-growing commodities and energy business.

ICE is likely to kick off its new exchange by offering a range of energy derivatives, as well as clearing of over-the-counter (OTC) energy and commodity derivatives.

However Magnus Bocker, SGX chief executive, said: "I have no reason to believe we can't work with ICE. We are complementary and our products have little overlap. I think that opens up a lot of opportunities."

His comments come only two weeks after ICE chief executive, Jeff Sprecher, downplayed any threat posed by his arrival in Singapore, saying he and Mr Bocker would "see what we may be able to do together".

Asked in an interview in Singapore if he had anything in mind, Mr Sprecher said: "Not specific. Right now we're focused on getting our own infrastructure in place, but that doesn't mean there aren't opportunities for us together.

"He [Mr Bocker] and I have the kind of relationship where we can work things out. They [SGX] have a huge membership base and footprint that goes back for years that really is ingrained in the economy here and we're starting with almost nothing. So there may be opportunities for us to find ways of working together."

SGX has been trying to grow its business organically since the failure under Mr Bocker in 2011 of an attempted takeover of ASX, the Australian exchange.

However, the exchange is seen by analysts as lacking the scale of market infrastructure to support what many see as the next stage of Singapore's growth as a financial centre based on its existing strengths in coal, iron ore, crude oil and liquefied natural gas trading and storage.

"If we really want to be a [major] financial centre we need to see more exchanges in town," Mr Bocker said.

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