Speaking to Lawyers Weekly, the head of Norton Rose Australia's M&A group, Shaun Clyne, said he was surprised by the decision.

"It is never a good thing in terms of cross-border activity to have a transaction knocked back," Clyne said. "It won't be a deal killer in terms of transactions, but it will lead to a temporary halt."

Yesterday afternoon (5 April) the ASX made public advice from the Foreign Investment Review Board that the Federal Treasurer, Wayne Swan, believed the $8.4 billion proposed merger should be rejected as being "contrary to the national interest".

Although both the SGX and ASX have an opportunity to respond, SGX chief executive Magnus Bocker said he would not alter its current offer.

Clyne said he has already had clients asking about what impact the Treasurer's position would have in other sectors.

"Is this a systematic shift in policy that will have ramifications in other sectors, particularly energy and resources?" Clyne said. "That is a concern and a question we have already had clients ask."

If the merger is sunk, it would be a blow for Clayton Utz and Freehills.

Clayton Utz is acting as the Australian adviser for the SGX, with national M&A head Rod Halstead and corporate partner Karen Evans-Cullen leading. Allen & Gledhill is the Singaporean adviser to the SGX.

Freehills partner Fiona Gardiner-Hill is acting for the ASX. The chair of the ASX, David Gonski, was a partner at Freehils from1979 to 1986.

Both Clayton Utz and Freehills declined to comment when contacted by Lawyers Weekly.

Although the Australian Competition and Consumer Commission (ACCC) said on 15 December 2010 that it would not block the merger, Karen Evans-Cullen told Lawyers Weekly at the time that there was still a long road ahead to get final approval.

"We were confident the whole way through that the ACCC would give approval, but this step would probably be the easiest of the various approvals that need to be made for the merger to go through," she said.