Singapore Exchange Limited

From MarketsWiki
(Redirected from Singapore Exchange)
Jump to navigation Jump to search
SGXMobileApp-728x104.jpg
Become a sponsor »
SGXMobileApp-728x104.jpg

Singapore Exchange, Ltd.
SGX gradient logo.jpg
Founded 1999
Headquarters Singapore
Key People Loh Boon Chye, CEO; Muthukrishnan Ramaswami, President
Products Derivatives, Equities, AsiaClear OTC platform
Website www.sgx.com

The Singapore Exchange (SGX), created in 1999, is a multi-asset class equities and derivatives exchange, one of the largest in Asia.

The exchange is structured into four business units: fixed income, currencies and commodities; equities; data connectivity and indices; and global sales and origination. The exchange set the new structure in July 2019.[1]

SGX is the first Asian clearing house to clear OTC traded financial derivatives comprising interest rate swaps and non-deliverable Asian foreign exchange forwards.[2]

SGX is a Primary Member of CCP Global, the global association of Central Counterparties (CCP), which represents 42 members who operate more than 60 individual CCPs across EMEA, the Americas and the Asia-Pacific region.[3]

SGX ranked 20th among global derivatives exchanges by volume in 2021, with 232 million contracts traded, down 6.2% from the previous year's 247.5 million contracts, according to Futures Industry Association annual volume figures.

History[edit]

The SGX was created on Dec. 1, 1999, following the merger of the Stock Exchange of Singapore and the Singapore International Monetary Exchange, and successfully demutualized and listed its shares on its own bourse in December 2000. Five years later, SGX expanded into commodities trading through a joint venture with the Chicago Board of Trade called the Joint Asian Derivatives Exchange (JADE). Later that year, the SGX re-launched Catalist, its second listing board for faster-growing securities that was previously known as SESDAQ.[4] In 2009 SGX formed a joint venture with Chi-X Global to launch the world's first exchange-backed dark pool due to commence in mid-2010.

SGX acquired the Singapore Commodity Exchange (SICOM) in June 2008.

In 2009, the SGX was officially recognized for its outstanding over-the-counter (OTC) derivatives market, SGX AsiaClear, by receiving its second Asia Exchange of the Year award from Energy Risk magazine.[5] In granting the award, presenters cited the SGX's new product innovation in areas such as clearing mini fuel oil contracts and OTC cleared iron ore swaps. SGX AsiaClear, launched by the SGX in 2006, is Asia's only OTC clearing platform for traded derivatives and currently boasts 424 counterparties.

SGX also entered into several agreements with other exchanges, including a deal in mid-2009 with Norway's Oslo Børs (Oslo Bourse) to cooperate on secondary listings in energy, oilfield services and shipping.[6]

Later in 2009, the SGX announced a joint market-development agreement with Taiwanese exchange GreTai Securities Market as part of SGX's "Asian Gateway" strategy for market growth.[7] The SGX forged joint ventures with exchanges in India and Taiwan and plans to be the world's first official trading exchange to back an investment dark pool.

In July of 2012, SGX and Securities Investors Association (SIAS) announced they would sign a memorandum of understanding (MOU) to formalize their commitment over the next three years to bring investing to the community.[8]

On January 02, 2014, SGX-DC, the clearing arm of SGX, became the first Asian firm to be granted registration as a Derivatives Clearing Organization by the CFTC. It enabled U.S. persons to clear onshore in Singapore with SGX-DC all swaps the central counterparty (CCP) currently clears. SGX clearing members not registered with the CFTC as Futures Commission Merchants can continue clearing swap contracts for U.S. persons via SGX-DC, following an extension of the no-action relief letter from CFTC to March 31, 2014.

In addition, SGX-DC and SGX's securities clearing house, The Central Depository, had also applied to the ESMA for recognition as a third-party CCP in order to continue providing clearing services to European Union customers. [9]

In May of 2014, SGX hired Ringo Chiu, former CEO at Citic Securities International, to head a new office in Hong Kong focused on derivatives. [10]

In November 2016, SGX completed the acquisition of the Baltic Exchange for $108 million, giving it a more-than-40% share of a key freight derivatives market.[11][12] [13]

On November 13, 2018, Singapore Exchange announced it would be launching a new securities settlement and depository framework and system on December 10 2018, enabling a shorter securities settlement cycle of two days (T+2) and simultaneous settlement of money and securities. The move from a T+3 to a T+2 settlement cycle would harmonise Singapore’s stock market with that of global markets including Australia, the European Union, Hong Kong and the U.S.[14]

In May of 2018, the exchange took a minority stake in the London-based foreign exchange startup Cobalt, which is using distributed ledger technology to streamline post-trade settlements.[15]

In July 2019, the exchange invested in Smartkarma, an investment research platform that uses alternative data. The technology links institutional investors, analysts and listed companies to share research and interact.[16]

In September 2019, SGX was named “Derivatives Exchange of the Year” by Asia Risk magazine for the sixth consecutive year. Asia Risk magazine highlighted SGX's portfolio compression services as a particular point of praise for the exchange.[17]

In March of 2019, SGX acquired a 20% stake in the upstart foreign exchange trading platform BidFX, with the aim of bringing together FX futures with OTC markets.[18] SGX announced on June 29, 2020 that it would acquire the remaining 80% stake in BidFX from its other shareholders for approximately US$128 million in cash – a move that would expand SGX’s reach into the global FX over-the-counter market. [19]

Products[edit]

SGX offers trading in securities, derivatives and commodities, including Asia’s broadest range of equity index derivatives, covering more than 80% of Asia’s economies – China, India, Indonesia, Japan, Taiwan, Thailand and Philippines. It also offers clearing and settlement of swaps, as well as market data and access services, depository and broker services to all SGX securities members.

SGX introduced Asian foreign exchange futures for six currency pairs, AUD/USD, AUD/JPY, USD/SGD, INR/USD, KRW/USD and KRW/JPY, on November 11, 2013. [20]

SGX began offering three index futures contracts based on the SGX MSCI Thailand Index, SGX PSE MSCI Philippines Index, and the SGX MSCI India Index, on March 5, 2014 for trading directly in the U.S. [21]

SGX has become the most popular market for foreign investors to bet on Indian equity indexes, with Nifty 50 futures tracking the National Stock Exchange of India (NSE)’s main index.[22]

In 2014, SGX expanded its suite of foreign exchange futures to include currency futures contracts on Chinese renminbi (RMB), Japanese yen and Thai baht. [23]

Also in 2014, the exchange launched nine commodity derivatives contracts in coal and iron ore. Iron ore futures are its most active commodity derivatives contract.[24]

In November 2014, the Singapore stock exchange announced plans to begin a bond-trading platform by the middle of 2015. It will begin by trading Asian corporate bonds in G-3 currencies and follow that with Asian local currencies. SGX formed a unit, SGX Bond Trading, to offer the products and signed a contract with technology provider TradingScreen.[25]

In January 2015, it was reported that the exchange was in talks with the China Securities Regulatory Commission to begin trading Chinese equity-index options, beginning with options on the FTSE China A50 Index. [26]

In October 2015, SGX launched the Asian liquefied natural gas (LNG) spot price index, SGX LNG Index Group (SLInG), together with its subsidiary Energy Market Company (EMC) and later launched cash-settled SLInG LNG swaps and futures to address the growing need for risk management, and also to support the continued growth of LNG trading in Asia.

On August 29, 2016, SGX launched the SGX APAC ex Japan Dividend Leaders REIT Index, composed of 30 real estate investment trusts (REITs) across the Asia Pacific ex Japan region. It is the first SGX index to be used as a benchmark index for a new exchange-traded fund (ETF) issued by Phillip Capital Management. It is composed entirely of REITs in the Asia Pacific region that are dividend weighted.[27]

On June 14, 2021, SGX launched the world’s first ESG REIT derivatives, the SGX Nikkei ESG-REIT Index Futures contract, expanding its partnership with Nikkei.[28]

Sustainability at SGX[edit]

Information about SGX's corporate commitment to sustainability can be found on its website here.

Contracts Listed[edit]

Technology[edit]

The Singapore Exchange finalized a deal on Nov. 7, 2013 with the London Stock Exchange Group's MillenniumIT to supply the technology for an upgrade of SGX’s securities clearing systems to process deals in cash products such as equities and bonds. [29]

SGX has an arrangement with Nasdaq to use its Genium INET technology to support the SGX trading and clearing platforms.[30]

In 2015, the exchange expanded its reach into the US market with a technology deal with the CME Group, which uses CME's data facility in Aurora, IL as an access hub to directly connect North American SGX customers to SGX. The deal allows customers to offset positions on a number of contracts between SGX and CME Group, with 24-hour trading access and risk management. SGX also has data center links with other exchanges such as the Australian Securities Exchange, Eurex, Hong Kong Exchanges & Clearing and Japan Exchange Group.[31]

In July 2021, SGX announced it would acquire the FX order management system MaxxTrader from FlexTrade Systems for US$125 million, further extending its reach into the FX over-the-counter (OTC) space.[32]

Cross-Trading Agreement with CME[edit]

Beginning in 1984, the SGX and CME established a mutual offset system agreement, giving market participants the choice of clearing Eurodollar, Euroyen Futures and yen-denominated Nikkei 225 futures at either CME or SGX. Prior to CME's trading hour expansion, traders could shift from one platform to another, essentially opening a 24-hour trading day for the three contracts.

Contract Volume[edit]

Year Total Annual Volume* Percent Change
2021 232,104,773 (-) 6.2%
2020 247,510,317 3.04%
2019 239,867,892 10.34%
2018 217,387,520 21.9%
2017 178,374,950 3.5%
2016 172,421,585 (-) 6.2%
2015 183,870,944 52.7%
2014 120,398,368 7.4%
2013 112,077,267 39.1%
2012 80,548,318 11.4%
2011 72,119,650 17.1%
2010 61,593,687 16.0%
2009 53,237,389 --

2016[edit]

Exchange Volume Percent Change
Singapore Exchange 156,802,499 (-)10.9%
SGX Asiaclear 15,619,086 97.2%
Singapore Exchange Ltd 172,421,585 (-)6.2%

Key People[edit]

Initiatives[edit]

The SGX has continued its trend of linking up with exchanges well beyond its shores to add trading volume and value. In March 2010, SGX joined with the National Stock Exchange of India (NSE) in a memorandum of understanding (MOU) to develop further NSE-linked products for listing on the SGX similar to its deal to list S&P CNX Nifty Futures, which have traded in Singapore since 2000.[33]

In February 2010, a handful of ASEAN countries including Singapore chose NYSE Technologies for the technology that would link their respective exchanges for growth in the region. The Singapore Exchange, the Stock Exchange of Thailand, the Philippine Stock Exchange, Bursa Malaysia and the Indonesia Stock Exchange are involved in the project. [34]

In October of 2010, the Singapore Exchange and the Australian Securities Exchange entered into a merger agreement intended to create Asia's second largest exchange group behind Hong Kong Exchange and Clearing. SGX offered the equivalent of US$8.2 billion for the Australian Exchange.[35] However, in April of 2011 the Australian government blocked the merger and ASX withdrew its bid.

In August 2011, SGX launched its Reach trading engine in an effort to improve market quality and liquidity. It is the world's fastest trading engine and offers 10 times more capacity.[36]

On Oct. 1, 2014, SGX acquired the remaining 51 percent stake in the operator of Singapore's national electricity market, Energy Market Co (EMC) for $23 million, giving it a platform for electricity and other energy futures contracts. SGX had already bought 49 percent of EMC in August 2012. NEMS is the first liberalized spot electricity market in Asia. The Energy Market Authority (EMA) regulates EMC.[37] SGX began trading electricity futures in June 2015.[38]

SGX acquired the Baltic Exchange in 2016, in a deal that gave SGX access to a trading platform for the multibillion-dollar freight derivatives market. The SGX offer valued the Baltic Exchange at 87 million pounds.[39]

In May of 2018, the NSE and the Singapore Exchange abandoned talks on a cross-border trading link in the midst of a court battle that soured their 18-year partnership. The venture would have enabled traders in Singapore to buy and sell derivatives on exchanges in the Gujarat tax-free zone known as Gift City.[40] The dispute brought about the end of Nifty 50 Index futures in Singapore, leaving international investors looking for another way to hedge their exposure to one of Asia's largest markets.

However, the deal ended up taking place four years later, on July 29, 2022, when India's Prime Minister Narendra Modi launched the NSE IFSC-SGX Connect, a joint venture between the National Stock Exchange of India and Singapore Exchange at the Gujarat International Finance Tec (GIFT) City, Gandhinagar. The platform enabled global investors to trade in dollar-denominated Nifty futures contracts available on the Singapore Exchange (SGX) in GIFT City. Investors also have real-time access to NSE IFSC market data.[41]

Resources[edit]

References[edit]

  1. ↑ SGX realigns business and client organisation to grow and scale asset classes. SGX.
  2. ↑ SGX wins industry endorsement as 2013 “Clearing House of the Year” and for “Most Innovative New Contract Launch”. SGX.
  3. ↑ CCP Global Members. CCP Global.
  4. ↑ SGX unveils Catalist. Moneycontrol.com.
  5. ↑ SGX named Asia’s Exchange of the Year for the second time. SGX.
  6. ↑ Oslo Bourse and SGX sign secondary listings deal. Reuters.
  7. ↑ Singapore Exchange and GreTai Securities Market Sign Co-operation MOU. SGX.
  8. ↑ Press Release. SGX.
  9. ↑ SGX becomes first Asian firm to be designated a derivatives clearing organisation regimes. Risk.net.
  10. ↑ Singapore Exchange hires Citic exec for China derivatives push. The Financial Times.
  11. ↑ SGX completes Baltic Exchange acquisition. The Business Times.
  12. ↑ Singapore Exchange completes takeover of London's Baltic Exchange. Reuters.
  13. ↑ Asia Exchange of the Year: SGX. Risk.net.
  14. ↑ SGX launches new securities settlement and depository system. SGX.
  15. ↑ Singapore Exchange Backs Distributed Ledger Alternative For FX Trading. Forbes.
  16. ↑ SGX invests in research platform Smartkarma. The Trade.
  17. ↑ SGX named “Derivatives Exchange of the Year” by Asia Risk for sixth consecutive year. SGX (News Release).
  18. ↑ Singapore Exchange buys 20 percent stake in forex trading platform for $25 million. Reuters.
  19. ↑ SGX to fully acquire BidFX, advancing its global ambitions to offer end-to-end FX platform and solutions. SGX.
  20. ↑ SGX Launches Asian Foreign Currency Futures. Asia ETrading.
  21. ↑ SGX Asian Index Futures Contracts Gain CFTC approval. Mondo Visione.
  22. ↑ Proposed NSE IFSC-SGX Connect receives regulatory dispensations. NSEIndia.com.
  23. ↑ SGX Introduces RMB FX futures. SGX News and Updates.
  24. ↑ Singapore Exchange hires Citic exec for China derivatives push. The Financial Times.
  25. ↑ Singapore Exchange to Start Bond-Trading Platform by mid-2015. Bloomberg.
  26. ↑ SGX Plans China Equity-Index Options on Futures Demand. Bloomberg.
  27. ↑ SGX launches SGX APAC ex Japan Dividend Leaders REIT Index. SGX.
  28. ↑ SGX launches the world's first ESG REIT derivatives. SGX.
  29. ↑ SGX settlement upgrade via LSE tech deal. The Financial Times.
  30. ↑ SGX’s next-generation derivatives trading and clearing platform to use Nasdaq technology. SGX.
  31. ↑ SGX establishes presence in CME Group co-location data centre in Aurora, Illinois. SGX.
  32. ↑ SGX acquires FlexTrade FX OMS for $125 million. The Trade News.
  33. ↑ National Stock Exchange of India and Singapore Exchange to explore listing more India-linked products on SGX. SGX.
  34. ↑ ASEAN Exchanges Select NYSE Technologies To Build Trading Link. ECNs and Exchange News.
  35. ↑ SGX-ASX talk merger; to be 5th largest exchange group. Commodity Online.
  36. ↑ Press Release. SGX.
  37. ↑ SGX buys remaining 51% stake in electricity market operator EMC. Channel News Asia.
  38. ↑ SGX named Exchange of the Year at global Energy Risk Awards. SGX.
  39. ↑ Baltic Exchange board backs SGX bid for London firm. Reuters.
  40. ↑ Singapore, India exchanges 'abandoning trade link talks'. The Business Times of Singapore.
  41. ↑ PM Launches NSE IFSC-SGX Connect in GIFT City. The Economic Times of India.
Retrieved from "http://www.marketswiki.com/wiki/index.php?title=Singapore_Exchange_Limited&oldid=242629"