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The link will facilitate the efficient trading, settlement and holding of SGX-quoted securities by Australian investors and that of ASX-quoted securities by Singaporean investors. The trading link will also provide brokers access to market and trading information on the selected securities and allow them to transmit orders through their existing trading terminals directly into the electronic trading systems of the other exchange.
Thomas Kloet, CEO of SGX said, "This initiative is a world-first, where investors in one market would be able to trade with such ease in the stocks of another through exchanges located in different jurisdictions, with individual sets of regulations, currencies and trading engines."
"An innovative arrangement like this is a reflection of the shared vision by the SGX and ASX in meeting the challenges of an increasingly sophisticated global market with growing and changing investor needs and demands," Mr Kloet added.
ASX and SGX expect this link to be available by July 2001. The list of co-traded securities will be limited initially to the most liquid, best known securities on each exchange, although the service would be subject to review and extended as demand for more co-traded securities increases.
Maurice Newman, Chairman of ASX said, "As recent movements in North America and Europe have highlighted, no market is limited by national borders. Companies and investors will operate where their interests are best served and wherever they might perceive the greatest value."
"This agreement brings our two exchanges closer to implementing a trading and settlement regime that will increase the depth and liquidity of each market. This is the goal of the alliance as it is that which most attracts companies and investors to a market," he said.
"ASX has long believed that multilateral links between exchanges hold the best prospects for success. The principles incorporated in this agreement highlight the method we believe best suited to produce a viable co-trading service."
To ensure an early transition to the co-trading regime, the trading link will incorporate to the maximum extent possible, existing systems. Under the envisaged system, the process will remain simple and change to brokers' back-office systems should be kept to a minimum.
Under the agreement, investors in Australia and Singapore will be able to buy and sell equity securities in each other's market, in their own currency, through stockbrokers in their own country. ASX will participate on behalf of ASX brokers, in the SGX market, to buy or sell SGX-listed securities. Similarly, SGX will participate in the ASX market to buy or sell ASX-listed securities on behalf of SGX brokers. Transactions will take place in accordance with the rules and procedures of the securities' "home" exchange.
For Australian investors, the service will enable settlement to occur in Australian dollars, and custody will also be in Australia, via a CDI (CHESS Depositary Interest) facility. For Singaporean investors, settlement can be in either currency. Custody of ASX-listed shares held by Singaporean investors will remain in CHESS, the beneficial ownership being recorded in SGX's Central Depositary (Pte) Limited.
Discussions on possible amendments to the regulatory frameworks to facilitate the links have begun with the Australian Securities and Investment Commission (ASIC) and the Monetary Authority of Singapore (MAS).
The agreement was signed in Canberra, Australia by ASX Chairman, Mr Maurice Newman and SGX CEO, Mr Thomas Kloet. Witnessing the signing ceremony were the Australian Federal Treasurer, the Hon. Peter Costello MP, and the Singapore Deputy Prime Minister, the Hon. B.G. Lee Hsien Loong.
