IntercontinentalExchange Group, Inc. (ICE), the leading global network of exchanges and clearing houses, today announced a definitive agreement to acquire Singapore Mercantile Exchange (SMX) in an all-cash transaction.
The acquisition will add to ICE's current network of markets and clearing houses in the U.S., Canada, Brazil, the U.K. and continental Europe.
SMX operates futures markets in Singapore across metals, currencies, energy and agricultural commodities. The Exchange retains licences to operate as both an approved exchange and approved clearing house, providing ICE with exchange and clearing infrastructure in Asia for the first time. Upon completion of the transaction, ICE anticipates there will be a period of business transition in which ICE will implement technology changes and, in consultation with market participants, clearing members, and regulators, will evaluate the product and clearing strategy of SMX to ensure the offering meets market participants' needs in the region. SMX is a wholly owned subsidiary of Financial Technologies (India) Ltd (FTIL) and is regulated by the Monetary Authority of Singapore (MAS).
David Goone, Chief Strategy Officer, ICE, said: "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."
Features of the transaction:
- SMX and SMXCC will transition from their existing technology to the ICE trading and clearing platforms
- SMX members will benefit from ICE's world class technology and trading platform capabilities which offer industry-leading performance, functionality and stability, and other technological innovations such as ICE Mobile and WebICE, increasing global market access
- Singapore is the regional huhub for much of the region's physical commodity trade. Through SMX, ICE will offer regional hedging opportunities for market participants to manage their price risk in a well regulated and transparent environment
- Whilst ICE has not taken a decision on new products, opportunities include the potential for a variety of new cleared contracts to serve the Asian commodity and financial derivatives markets
- With specialist commodities expertise in trade execution, clearing and physical delivery infrastructure, ICE is well placed to build on the SMX infrastructure and membership base already in place
- SMX will continue to be based in Singapore and operate as a separate recognised body with its own independent board of directors, including Ang Swee Tian, the former President of the Singapore Exchange (SGX)
ICE's financial advisor is Morgan Stanley. ICE's international legal advisor is Shearman & Sterling LLP and domestic legal advisor in Singapore is Allen and Gledhill and in India is Luthra & Luthra.
FTIL's financial advisor is Moelis & Company. FTIL's international legal advisor is Rajah & Tann and domestic legal advisor is JSA.