Treasurer Wayne Swan is leaning towards rejecting the $8.4 billion takeover of ASX Limited (ASX:ASX) by Singapore Exchange Limited (SGX).
The Foreign Investment Review Board (FIRB) has relayed the news to SGX that Swan believes the merger should be rejected as contrary to the national interest.
Swan has based his preliminary view on the Foreign Acquisitions and Takeovers Act.
In a market update, ASX reiterated its belief that Australia needs to participate in global exchange consolidation, with recent examples including the merger of the London and Toronto exchanges.
The ASX board had unanimously recommended the takeover to shareholders.
If the merger is blocked it will be despite concessions by SGX including allowing an equal number of Australian and Singaporean board members, as well as a decision by regulator ACCC not to intervene in the deal.
ASX and SGX first announced the merger proposal in October.
ASX shares fell 3.3% during Tuesday's trading to 33.700.