THE Singapore Exchange stunned financial markets across the region on Friday after reports emerged that it is in talks to merge with Australia's bourse operator, the ASX.

Trading in the shares of both exchanges was halted yesterday afternoon pending an official announcement that could come as soon as Monday.

SGX spokesman Magdalyn Liew declined to comment, while the ASX would only say that it was in talks about 'a possible business combination'.

The deal would bolster both firms in an increasingly competitive financial market, especially the ASX, which will lose its share trading monopoly next year.

It would also make the SGX one of the most valuable bourses in the world once it combines its market value of US$10 billion (S$13 billion) with the Australian firm's $8 billion.

Only the HK Exchange with a market value of $30 billion and US-based CME Group - which operates a futures exchange and has a market value of $24.7 billion - would be more valuable.

SGX, ASX in talks