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In case you hadn’t noticed, this blog has re-entered the phase where I get massively bored and continuously spam it with short and rather meaningless posts.

So here’s a quick spray:

The ASX/SGX merger might be the first casualty of the hung Parliament. My one great fear when I learned who would hold the balance of power in the lower House was that the only common ground between the Greens and the rural independents would be their protectionist streak. And it seems like the ASX/SGX merger will be blocked by Andrew Wilkie, Adam Bandt, Tony Crook and Bob Katter. The two wiser independents, the fiscally conservative Rob Oakeshott and  the pragmatic Tony Windsor have reserved their decision until after they have heard from the regulators. Unfortunately, without the support of either these crucial independents or the Liberal Party, the merger will be stopped dead in its tracks.

As I have said, the merger is not a shoe-in. Whilst there are unlikely to be any anti-competition concerns (the ASX is effectively a monopoly anyway, and a merger between two regional stock exchanges only increases competition on the global stage) for the ACCC to worry about, there may be ‘national interest’ concerns. This is a relatively new area of law, or rather an ancient power awakened by New Agers dabbling in the forbidden lost art of protectionism. Under the Foreign Acquisitions and Takeover Act, 1975, the Treasurer, acting on the advice of the Foreign Investment Review Board has the power to block foreign acquisitions which are “against the national interest”.

Whilst the ‘national interest’ test contains many valid concerns (as I have briefly outlined here), those of you who are legally trained should instantly see that it is the most amorphous test imaginable. Those of you who are economically trained can see the litany of semi-racist, colonial arguments that will be put into play.

In addition to the Treasurer’s power under the Act, however, the Government must also pass certain regulations to effectuate the acquisition of the ASX, which is a major financial regulator in Australia. Under a hung Parliament, prima facie, that bill will fail without the support of both Houses.

With some luck, the Liberals will lift their game and support the merger. And with even greater luck, the Labor Party will do the same – which is in doubt, given dark mutterings from various senior ministers.


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