SGX CEO, Mr Thomas Kloet said “In the third and fourth quarters of this fiscal year, we remain focused on building our capacity for long-term growth. We will continue our plan of launching several initiatives designed to enhance our portfolio of exchange related businesses and add to the attractiveness of our markets."
Some of SGX’s new initiatives include:
Securities Market
Open Interface for Securities Trading
The exchange launched SGXAccess on 29 March 2001, an open interface for securities trading which provides for wider and more direct distribution of SGX products. It allows SGX Securities Trading (SGX-ST) member firms to trade in Singapore’s securities market from anywhere in the world, through their own trading terminals. SGXAccess is based on a global financial messaging interface standard. To date, twelve SGX-ST member firms have signed Memoranda of Intent to adopt SGXAccess by the second half of 2001.
Exchange Traded Funds (ETFs)
In a joint venture with The American Stock Exchange (Amex®), SGX launched five Amex®-listed exchange traded funds (ETFs) on 4 May 2001. These five products are among the most popular and actively-traded Amex® ETFs. The joint venture is committed to developing an ETF market in Singapore and to promote ETFs regionally. We expect to list an ETF product on the local Straits Times Index (STI) by the third quarter of 2001 as scheduled. Other products will be phased in as the market develops.
Securities Borrowing and Lending
SGX is finalizing the operational procedures for setting up a securities borrowing and lending facility to boost market liquidity. This facility will improve investment opportunities for market participants and pave the way for the creation of an equity options market. We expect this facility to be ready in the third quarter of 2001.
Cross-Listings with the Australian Stock Exchange (ASX)
In June 2000, SGX formalized an agreement with the Australian Stock Exchange (ASX) to design and establish an electronic co-trading and clearing system. This electronic linkage will allow brokers at each exchange to transmit orders through their existing trading terminals directly into the electronic system of the other exchange for execution. Information necessary for clearing and settlement will also be provided. We believe this facility can increase the liquidity of the covered securities and can serve as a model for regional cooperation. We anticipate this linkage to be operationally ready in the second half of 2001.
Straight-Through-Processing (STP)
We are developing an open settlement infrastructure that will allow member firms to connect their own settlement and risk management systems to the CDP settlement system, and facilitate Straight-Through-Processing (STP) to improve market efficiency. STP, which automates trade processing from order entry to settlement and custody, will not only reduce operating and business costs, but also lower the risk for market participants in securities settlement, and facilitate cross border settlement.
Under the first phase of this project, we will develop common messaging standards for participants, determine the business and technical specifications, and promote market acceptance of the infrastructure. We expect to complete this phase by 3Q 2001. The second phase will be completed with the live system in place, in approximately another 2 years.
Derivatives Market
Extending Access via Internet
SGX Derivatives Trading (SGX-DT) announced on 10 April 2001 that derivatives contracts on its Electronic Trading System (ETS) can be accessed via the internet. To date, one SGX-DT Corporate Member has started providing internet connectivity to ETS.
Extending Access via Bloomberg Terminals
On 23 April 2001, SGX-DT and Bloomberg L. P. announced that derivatives contracts on the SGX ETS are accessible via Bloomberg terminals. This partnership allows SGX to extend the global reach of its derivatives products via Bloomberg’s global distribution network.
Singapore Government Bond Futures
As announced previously, SGX is developing a futures contract based on Singapore Government Bonds. This product will complement our Singapore Dollar Interest Rate Futures Contract by enabling SGX-DT to offer risk management instruments on Singapore interest rates over a wider yield curve from the short to medium term. Trading is expected to commence in the first half of 2001.
Single Stock Futures
SGX-DT announced on 17 April that it intends to list single stock futures contracts to provide end users with greater flexibility in managing their investment portfolios. Initially, these contracts will be based on selected stocks listed on SGX-ST. The exchange also plans to introduce contracts on regional and global stocks at a later stage. Besides widening SGX’s product range, this initiative will enhance market depth by providing trading, hedging and arbitraging opportunities between the securities and derivatives markets. Trading is scheduled to commence in the third quarter of 2001, subject to approval from the Monetary Authority of Singapore.
IT Solutions
Joint Venture with Securities Firms to provide outsourcing services
On 27 March 2001, the exchange’s IT Solutions subsidiary (SGX-ITS) signed an agreement to form a joint venture company with DBS Securities and OCBC Securities to provide securities processing and settlement outsourcing services. This new company aims to increase operational efficiency and reduce transactional costs by allowing brokerages to focus on core competencies and enjoy economies of scale. The joint venture company is expected to announce its first suite of products by the third quarter of 2001.
