Asia Exchange of the Year: Singapore Exchange

Exchange of the Year: Singapore Exchange

Singapore Exchange continued to perform in what was a difficult year for Asian markets and actually increased its share price by one third in the judging period. The longest trading hours in the region allowed clients access to a wide range of counterparties and the exchange’s investment in capacity meant there were no issues in a period of extreme trading volatility and volumes.

The exchange began the judging period by merging its cash and derivatives channels as part of an organisation restructure to boost opportunities for growth.

SGX has operated under four segments all reporting into chief exec Loh Boon Chye from July 1.

The cash equities and equity derivatives businesses merged to fall under a single equities umbrella.  

They operate under a single platform for both retail and institutional clients, offering trading, clearing, post-trade and research services across all equities products. 

Michael Syn, formerly head of derivatives, was promoted to head of equities.

He said at the time: “Our expertise and market leadership in equity derivatives will be leveraged to internationalise our cash equities proposition through the introduction of new derivatives products, structured products and offshore risk management capabilities.” 

He added: “By focusing on equities as a single asset class, product and service innovation can span both cash and derivatives channels to address client needs holistically.”

The exchange launched in November a low sulphur fuel oil futures contract and it made a strong start.

SGX said various trading firms including CSC Commodities, SDTR Marine, Theme International Trading and BPI Financial traded the Platts Marine Fuel 0.5% FOB Singapore futures contract in its first week after launch.

SGX also said that various brokers are offering the product including Freight Investor Services (FIS), DBS, Marex Financial, Credit Suisse Securities Singapore and CGS-CIMB Securities (Singapore).

Singapore Exchange then launched in late February cash-settled methanol futures and swap contracts based on the S&P Global Platts daily methanol prices.

SGX introduced the contracts to help producers, traders and users more effectively manage risk, whilst also improving price discovery.

Commenting on the launch, petrochemical product manager at SGX, William Prajogo, said: “In today’s evolving market, international traders are seeking more transparency and better price-discovery and risk-management tools to hedge methanol prices and exposure.”

Singapore Exchange has also reiterated its plan to launch more environmentally friendly products to reflect “the global quest towards a greener environment”.

The Singapore-based group, which launched a low sulphur futures fuel oil futures product in November last year, said more green products are consistent with its status as the “international commodities trading hub”.

Lee Beng Hong, SGX’s senior managing director, head of Fixed Income, Currencies and Commodities, said: “Moving forward, we are exploring how we can play a bigger role in the global quest towards a greener environment.”

Lee said: “Singapore has emerged as the international commodities trading hub, supported by a diverse and vibrant ecosystem of participants. Building on this, we have over the years developed key pricing and risk-management tools for key elements of global trade, including freight, rubber, petrochemicals and iron ore – Asia’s first truly global commodity and a barometer of Asia’s economic activity.”

Lee continued: “Today, SGX’s role in delivering price-discovery and risk-management solutions has never been more relevant. Since launching the world’s first cleared iron ore swaps in 2009, we continue to innovate with new tools such as the world’s first high-grade (65% Fe) iron ore derivatives, Asia’s first electricity futures, and rubber contracts that serve as the global price benchmark for physical rubber, just to name a few.”

Lee’s comments came after SGX’s head of commodities said the exchange is researching products relating to “all things clean and green”, with a focus on carbon, liquefied natural gas (LNG) and energy metals.