SGX to woo more high-speed traders
SINGAPORE Exchange Ltd (SGX), Southeast Asia's biggest bourse operator, wants to lure more high-speed traders on to its stock market as it grapples with lower volume.
Computerised trading firms, which execute transactions in fractions of a second, account for a negligible share of volume on Singapore Exchange's cash equities market, according to bourse spokes-woman Loh Wei Ling, while they contribute 30 per cent of revenue from derivatives.
Singapore Exchange will seek to change that once it introduces safeguards, chief executive officer Magnus Bocker said this month.
"We will pursue high-frequency trading once we have circuit breakers and other policies in place," he said. "That will enhance the liquidity and quality of the Singapore market."
High-frequency traders facilitate the majority of United States equity transactions, where computerised firms have ample opportunity to profit from fleeting price discrepancies because transactions take place on more than 50 venues.
Singapore isn't as fragmented, which keeps computer traders away. Credit Suisse Group AG and Tabb Group LLC said the city's relatively high trading and clearing fees also deter those firms.
Bocker is seeking more business with the daily average value of equity trades down to about S$1.5 billion (RM3.81 billion) this year, a 36 per cent plunge from 2007, according to data. Singapore Exchange's net income was S$336 million for the fiscal year ended in June, 20 per cent lower than fiscal 2007.
SGX climbed as much as 0.7 per cent yesterday, before trading 0.1 per cent higher at S$7.42 as of 1.07pm in the city.
Bocker's been building the infrastructure and regulatory framework to attract high-speed traders. The bourse rolled out a S$250 million trading platform in August 2011 that can execute transactions in 90 microseconds.
The exchange hasn't been successful in attracting orders from the fastest traders because of the high cost of trading in the city, according to Credit Suisse and Tabb Group. Bloomberg