Australian Stock Exchange Ltd ("ASX") and Sydney Futures Exchange Ltd ("SFE") sign Heads of Agreement for Merger Proposal

The Australian Stock Exchange Ltd (ASX) and the Sydney Futures Exchange Ltd (SFE) have signed a non-binding Heads of Agreement to facilitate the next stage of the proposed merger of the two entities. Following the unanimous approval of the ASX and SFE Boards, the parties have signed a heads of agreement reflecting in principle agreement on the key commercial, structural and integration issues in relation to the proposed merger. The aim of the merger is to enhance Australia's securities and derivatives markets so they can better meet the intensifying challenges of global competition. While not a legally binding agreement, it provides a framework for preparation of binding transaction documents to facilitate an SFE scheme of arrangement (the "Scheme"), which will include a proposal to demutualise SFE Demutualisation of SFE, which depends on the approval of its members, is central to the merger. ASX and SFE will now commence detailed due diligence with a view to signing binding transaction documents - including an implementation agreement and Scheme documentation for SFE members - in mid June 1999. SFE members are expected to vote on the Scheme and the other relevant transactions in early September 1999. If the vote is in favour, implementation of the merger of ASX and SFE will begin early November 1999. The details of the Heads of Agreement and its implications for ASX and SFE are attached in the following market announcement. ASX Managing Director, Richard Humphry, said the signing of the heads of agreement was a significant step towards the merger. "There is a long road ahead. The proposal requires the approval of SFE's members, SFE's demutualisation and the ACCC's clearance. "Both ASX and SFE see their merger would create a platform for growth - growth in both businesses, growth in the role Australia can play in the global capital markets and growth in the opportunities Australia can offer to the financial services sector. "A merger, if it passes through all the stages to fruition, will mean efficiencies in trading, a greater product range, benefits in sharing technology and broader career opportunities for the people in both organisations. We will be better equipped to meet the competitive challenges of the global marketplace. " "Another important aspect of a merger is that it would benefit Australia's growing reputation as a regional financial centre." SFE Chief Executive and Director, Leslie Hosking, said a merger of SFE and ASX would be a logical integration of two complementary businesses. "It is a proposal which makes sense for our members and makes sense for the markets. The SFE board has carefully examined all the options available to us, and was unanimous that the merger was the proposal we should take to our members. "SFE is the largest financial futures market in the Asia-Pacific region. We believe combining with the business of ASX is an opportunity to put Australia in a better position to respond to the extraordinary challenges being made by technology to traditional securities trading and to the movement of international capital."