Sfe Blasts Brokers Over Fee Concerns
The Age
Wednesday May 3, 2006
THE Sydney Futures Exchange has described as "opportunistic" the concerns of large institutional stockbrokers that its planned $5 billion friendly merger with the Australian Stock Exchange will create a pricing monopoly.
At what was possibly the SFE's last annual meeting yesterday, chairman Rick Holliday- Smith told shareholders the grievances were from a "small group of brokers" and he was "confident but cautious" the deal would succeed. The plan to create the world's ninth-largest exchange still needs the approval of both the Australian Competition and Consumer Commission and Federal Treasurer Peter Costello.The Australian Financial Markets Association, which represents brokers, has asked the ACCC to intervene to ensure competition for trading services, after talks with the ASX and SFE broke down. But the SFE's chief executive, Robert Elston, yesterday said: "At the moment the two exchanges don't compete, so we are not understanding the argument that to allow them to merge would be anti-competitive." Although the ACCC posed a "significant hurdle" to the deal succeeding, Mr Elston said the signs from the competition watchdog were encouraging. The ACCC has reached a preliminary view that the proposal does not raise competition concerns and is expected to issue a final report on May 17. In 1999, the ACCC thwarted an attempted ASX-SFE union because of "significant concerns" it would "be likely to halt competition" and result in "a monopoly in exchange trading". "Seven years of history since the previous rejections suggests to us . . . that if commonsense prevails it should get past the ACCC," Mr Elston said. But AFMA's executive director Duncan Fairweather said yesterday that large institutional brokers had "serious concerns" about the pricing monopoly created by a merger.Brokers were already concerned about the pricing policies of the ASX and the SFE, he said.SFE shareholders are likely to vote on the deal next month.
© 2006 The Age