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For SGX, 2013 was the year of infrastructure, said Magnus Böcker, CEO of the Singapore Exchange. Speaking at the FIA conference in Boca Raton, Florida he said the exchange had done very well in an IMF assessment and has invested in settlement and clearing.
“Being compliant with global standards is very important for us as a global financial center,” he added. “It came out that were were one of the best capitalised clearing houses in the world, well within the requirements of Basel III. Being one of the best means we live up to higher standards.”
SGX won CFTC approval as a derivatives clearing organization and is now working with EMIR rules and regulations in Europe, he added.
“But they are not as ready with their rules as the CFTC.”
For better or worse, that was a recurring theme at FIA Boca — U.S. regulators under pressure from Dodd-Frank and facilitated by working within a single legal jurisdiction, have been issuing rules some years behind the deadlines called for in the laws, but still 18 months or more ahead of expected European rule-making. Regulatory harmonization is working better in theory than in practice.
Böcker also said that SGX will undertake a next generation of post-trade operations using MillenniumIT, the Sri Lanka-based firm which provides the core technology for the LSE.
Mack Gill, CEO of MillenniumIT, said the contract represents a significant partnership for MillenniumIT and the first contract win for the full Millennium PostTrade solution, while Böcker said it will provide SGX with greater flexibility in the products it offers.
SGX will work with MillenniumIT to enable the expansion of clearing, settlement and depository services into multi-currency, multi-asset solutions for SGX’s international mix of members. SGX expects the system, which is based on Millennium’s PostTrade technology, to begin operating in phases from the end of 2015.
With the new post-trade system, SGX can shorten time-to-market for new securities products, support members with more flexibility and efficiency across their post-trade needs, and enrich services including enabling retail investors to grant their brokers access to information on all their investments held with SGX’s securities depository.
The exchange was named the clearing house of the year in Asia last year, the CEO said.
Böcker also said the exchange has implemented a new risk management system called Prism, presumably no relation to the NSA surveillance program by the same name. He said the exchange is working with Thomson Reuters to think about what they can do to create bond indices and to think about the world of futures.
“It’s a very early stage interesting project,” Böcker said. The exchange has also announced it will offer electricity futures in the future. He also expected iron ore and steel products, very much for the China market, which is his third theme. “We have acquired 40 percent of an energy market company; they are the spot market for electricity,” he said. SGX will also launch six new currency pairs in the third quarter.
“We are the first exchange outside Greater China — China, Hong kong and Taiwan — to clear for renminbi,” said the CEO. :We are doing a lot to support the renminbi market and we are the largest renminbi listing market.”
