For stock exchanges, bigger is always better. At least that's the thinking behind the proposed merger of the London Stock Exchange and Deutsche Boerse of Germany.

The planned tie-up that would create a giant exchange rivaling that of New York in breadth and depth is already seen as a potential threat to Hong Kong in the contest for new listings and other businesses from the Chinese mainland.

Hong Kong Securities Association chairman Benny Mau has said the combined British and German behemoth "would have more resources to create new platforms or to do promotion to attract mainland companies to list".

This could deal a serious blow to the Hong Kong Stock Exchange (HKEx) on which more than half of the listed stocks are from the mainland. The city's Stock Connect program with Shanghai and, later this year, with Shenzhen, cannot be taken as permanent shields against competition. Similar cross-border trading links can be set up between a newly formed British-German exchange and mainland bourses. For that reason, HKEx must take the overtures from the Singapore and Taiwan bourses for closer cooperation seriously. Coincidentally, or otherwise, the leaders of both exchanges had visited Hong Kong earlier this month to explore, among other things, cross-border trade possibilities.

Of course, it's too early to talk of a merger at this stage. But as Singapore Stock Exchange Chief Executive Officer Loh Boon Chye has said that instead of competing with each other, regional bourses should think more about alliances and cooperation to increase market share. Since the signing of a memorandum of understanding some two years ago, the Singapore exchange has secured 12 remote trading memberships on the Hong Kong exchange.

Although smaller than its Hong Kong counterpart, the Singapore bourse has been aggressive in developing new markets for mainland-centric financial products, including renminbi futures contracts. But, it's still lagging far behind Hong Kong, New York and London in attracting mainland listings.

Loh said the Singapore exchange is considering "a range of options" to expand its mainland connections. It may need to cooperate with Hong Kong to achieve that goal.

Huang Nai-kuan, senior executive vice-president of the Taiwan Futures Exchange, said a link-up with the Singapore bourse was expected later this year.

Hong Kong should see the Singaporean and Taiwan markets as potential partners rather than competitors because it's staring at a much bigger competitor taking shape in Europe.

(HK Edition 03/17/2016 page9)