ASEAN KEY DESTINATIONS
SGX plans bond trading platform launch in Q1
SINGAPORE Exchange Ltd (SGX) is looking to launch a corporate bond trading platform in the first quarter of 2016 as it seeks to expand its product suite in an effort to boost revenue, its CEO said.
SGX is seeing a business opportunity in offering a platform for fixed income as regulatory changes prompt global investment banks to scale back in this segment.
“Other than revenue diversification, we look at this also in terms of SGX being a multi-asset platform,” Loh Boon Chye, 51, said in an interview conducted as part of the Reuters Global Investment Summit in Singapore.
The veteran banker, known for his close ties with financial institutions at home, took the helm at SGX in mid-July from Magnus Bocker, who over five years built the derivatives business into the main source of revenue for the bourse.
SGX is one of the main listing platforms for Asian corporate issuers, with more than 2,000 bonds listed in 19 currencies and from issuers based in 34 countries. But SGX is looking to develop this further by allowing bonds denominated in US dollar, yen and euro to be traded on its platform.
SGX is one of the first Asian exchanges developing a bond trading system, which comes as investment banks such as UBS and Credit Suisse are cutting back on fixed-income businesses to shrink their balance sheets.
“We see that as a market solution for us to provide the platform so that banks can also trade and trade more without a lot of inventory,” said Loh, who used to head Asia-Pacific global markets at Bank of America Merrill Lynch and earlier worked at Deutsche Bank in Singapore for 17 years.
Loh said SGX is also working on introducing more yuan-denominated products, including Exchange Traded Funds.
Responding to a question on anaemic IPOs in Singapore, Loh said: “On the mainboard, we did have a few IPOs in the last few months ready to list, but we were not helped by market conditions.”
While Singapore is the biggest centre in Asia for foreign exchange trading and has seen strong growth as a derivatives centre, the average daily value of shares traded on its bourse trails far behind rivals in Hong Kong and Tokyo and is less than that of Thailand’s stock market.
Loh said a direct listing framework with China has helped increase the number of queries on potential listings. Measures to improve liquidity in the securities market have started to have an impact on SGX, he said.
For July-September, SGX reported its highest quarterly net profit in about seven years, boosted by a strong performance in the fast-growing derivatives business.
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