SINGAPORE, Feb 26 ― Singapore Exchange Ltd (SGX) said it had submitted an initial offer to buy the Baltic Exchange, the hub of the global shipping market, a move aimed at shoring up the Southeast Asian exchange operator's business.

Reuters earlier exclusively reported that the Baltic Exchange had held talks with SGX and other potential buyers months after the London Metals Exchange (LME) made an approach to buy it.

In a statement today, SGX said it had submitted a non-binding bid for the acquisition of the Baltic.

“SGX wishes to emphasise that as discussions are still preliminary, there is no certainty or assurance that the possible transaction will materialise or that any definitive or binding agreement will result from such discussions,” it said.

Other potential bidders include CME Group, ICE and Platts, sources had earlier told Reuters. CME, ICE and Platts declined to comment, as did Baltic Exchange Chief Executive Jeremy Penn when contacted yesterday, and it was unclear whether the talks had been initiated by the Baltic or its suitors.

Clearing houses and exchanges are all looking for an edge to give them a profitability boost amid growing regulatory scrutiny and weak commodities markets.

While the shipping market is currently suffering from overcapacity and sluggish global trade, the Baltic has carved out an industry-leading position in freight derivatives including through its Baltex platform.

One source had said a deal between SGX and the Baltic Exchange would be a good fit as Singapore looks to bolster its role as a maritime hub and for SGX to strengthen its freight derivatives business.

“A deal would be seen as earnings accretive in the near-term,” added the source, who declined to be named due to the confidentiality of the matter..

A third source added SGX was working with investment bank Jefferies on the potential deal. SGX and Jefferies declined to comment.

The Baltic produces daily benchmark rates and indices that are used across the world to trade and settle freight contracts. Despite its name, it is no longer a forum for trade in the chartering of vessels.

Normura advising

Three sources said Japan's biggest investment bank Nomura Holdings Inc had been appointed as the Baltic's adviser for a possible sale. Nomura declined to comment.

Sources said there had also been contact between the Baltic, which is owned by around 380 shareholders, many from the shipping industry, and the London Stock Exchange, which has a majority stake in clearing house LCH.Clearnet.

This, though, is unlikely to progress given the possible merger between Deutsche Boerse and the LSE announced this week.

The LSE declined to comment.

The LME ― previously owned by its members ― was itself bought by Hong Kong Exchanges and Clearing (HKEx) in 2012 for US$2.2 billion (RM9.25 billion). A deal with the Baltic would help the LME to expand its reach beyond metals. The LME declined to comment.

The Baltic, founded in 1744, had previously rebuffed approaches from the LME.

The first was an LME-proposed joint venture in 2010 to launch an exchange for freight derivatives trading.

In 2013, sources familiar with the matter said the Baltic had received expressions of interest from the LME and other suitors for its Baltex platform, launched in 2011. ― Reuters