SGX eyes bigger revenue from derivatives

SINGAPORE: Singapore Exchange Ltd (SGX) will increase revenue from derivatives 10 per cent to 15 per cent this year as the operator of Southeast Asia's biggest bourse introduces more products linked to benchmark stock indexes in the region, its president Muthukrishnan Ramaswami said.

The bourse plans to add equity-index futures on the Philippines and Thailand to offerings that include Nikkei 225 Stock Average and Indian contracts, he said.

"Derivatives account for between 25 per cent and 28 per cent of total revenue," Muthukrishnan said.

Singapore Exchange, which failed in its bid to buy Australia's main bourse two years ago, is focused on Asia and doesn't want to own venues in the US or Europe, he said.

SGX is planning yuan and foreign-exchange futures, as well as commodities contracts as it seeks to become a trading hub, he said.

"An agreement to offer reduced-size London Metal Exchange futures will probably be renegotiated after the largest bourse for industrial-metal trading was bought by Hong Kong Exchanges & Clearing Ltd."

"Singapore has become a good facilitator of derivatives transactions," Muthukrishnan said.

"It's much easier to transact in Singapore than to go directly into each of these individual markets. Investors find that rules don't change overnight. The jurisdiction is safe. It's an AAA-rated country."

The cost of complying with stric-ter global regulation of derivatives is among the challenges the bourse faces, he said.

Jurisdictions around the world are requiring more transactions to be processed through clearinghouses after the financial crisis that began in 2008.

SGX spends about S$30 million annually to comply with regulations, he said, compared with S$10 million a few years ago. Bloomberg