Atlanta-based Intercontinental Exchange Group, (ICE), one of the world’s largest financial trading exchanges, has announced the acquisition of Singapore-based Singapore Mercantile Exchange. The US giant continues its global footprint through M&A activity in a bid to hold on to the top spot in the world of exchanges and clearing houses.
ICE has been involved in an array of acquisitions over the last decade, however the current buyout of SMX signals the group’s move to operate across borders. Details of the commercials were revealed in a press notification; ICE purchased the Singapore bourse for $150 million and ICE will acquire 100% of Singapore Mercantile Exchange (SMX). This includes the SMX Clearing Corporation (SMXCC), a wholly-owned subsidiary of SMX and the clearing house for all SMX trades.
David Goone, Chief Strategy Officer, ICE, said in the press briefing: “The acquisition of SMX represents an important step in ICE’s growth trajectory as we look to expand our customer base and markets in Asia by establishing a local exchange and clearing presence. In recent years, Asia-based trading activity in our benchmark energy and interest rate products has been rising as the region increases in importance in global markets. ICE has had a presence in Singapore for over a decade and today’s announcement is a natural evolution of our strategy to further extend our network of markets across the globe.”
The SMX was launched by market veteran Jignesh Shah, founder of Financial Technologies (FT), an Indian-based technology provider for financial technology. Under the FT brand the group has established several exchanges including, MCX, DGCX and GBOT (now Bourse Africa).
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Commenting about the sale of SMX, Jignesh Shah said in a statement: “SMX acquisition by ICE is a testimony to India’s technology excellence and domain knowledge in developing and operating world-class financial markets and institutions that are at par with global standards I all respect, from International Financial Center like Singapore.”
In details filed to the Bombay Stock Exchange, the Order confirms that: “The transaction was approved by the Board of Directors of FTSPL (Financial Technologies Singapore) and FTIL (Financial Technologies India).
Shares of the listed technology provider were up 2.077% on the news, trading at 185.05 in India. The stock has suffered on the back of the recent spot exchange crisis involving senior officials from the FT group of companies, the stock price 52-week high was 1,197.90 (INR) and the low was 183.40.
Financial Technologies were unavailable for comment, however they stated that funds from the sale will be used towards the repayment of outstanding debt towards External Commercial Borrowings (ECB) and Foreign Currency Loan.
The Singapore Mercantile Exchange was launched in 2010 as a pan-Asian trading bourse, neighbor and competitor Hong Kong also launched a commodity focused exchange in 2011, the Hong Kong Mercantile Exchange (HKMEx). The new venue listed metals contracts in US dollars as well as the first offshore RMB commodity contract. Due to irregularities at the exchange regulators forced the venue to shut down in May this year.
India has gradually developed its financial markets trading environment since the 1990’s when the government liberalized the economy. Apart from FT, leading technology provider Tata Consultancy Services has been prominent in financial services with FX, treasury and exchange connectivity solutions and it has recently deployed its low latency connection to the NSE, SGX and HKEx.