Perhaps it was inevitable, given the precarious position of Australia’s current minority government — but this afternoon national Treasurer Wayne Swan issued a statement that he did not plan to approve the Singapore Exchange’s (SGX) merger/takeover of his country’s main stock exchange, the Australian Securities Exchange (ASX) on the grounds of national interest.

SGX’s US$8 billion offer needed Swan’s approval to proceed. While he noted that he hadn’t yet made a final decision, his statement to the Foreign Investment Review Board makes it clear the plan cannot succeed in its current form.

Swan’s party, the Australian Labor Party, holds only 72 of 150 seats in Australia’s federal parliament, and governs with the help of a handful of independents and minor party members who had expressed opposition to the takeover. As well as the Treasurer’s approval, the deal would also have required a change to Australian law to remove the ASX’s maximum 15% individual ownership restriction. Major opposition parties had also questioned the takeover, saying it would reduce the ASX to a branch office of a foreign exchange and result in most major trades taking place in Singapore.

Some have suggested the Treasurer favors a consolidation and is trying to obtain a more attractive deal for Australia, while the SGX says it will “consider appropriate responses”. While Australia’s exchange is larger, Singapore’s currently has a larger market cap and perhaps greater potential for growth in the short term. As well as a desire to compete against the larger Asian exchanges by merging, pride may be playing its part with each country eager to assert its status as a regional financial center. If this deal fails, both the SGX and ASX will be looking for alternative tie-ups and partnerships.