SGX prepares for new derivatives landscape

SGX claims it will be one of the first to adopt new international regulatory and risk management standards on derivatives clearing.

The Singapore Exchange (SGX) claims it will be one of the first bourses to adopt new international regulatory and risk management standards on derivatives clearing.

In a quarterly results statement issued Tuesday, the firm said its exchange and clearing house was on track to meet new standards set by the International Organisation of Securities Commissions (IOSCO) and Committee on Payment and Settlement Systems (CPSS).

The firm said it had already deployed adequate capital into its central depository and Singapore Exchange Derivatives Clearing (SGX-DC) to meet all obligations as central counterparties.

SGX said it was taking steps to maintain continuity in its global derivatives activities, seeking formal recognition from the US Commodity Futures Trading Commission (CFTC) for both its derivatives exchange (SGX-DT) and SGX-DC.

In the second half of 2013 SGX also plans to seek similar recognition from the European Securities and Markets Authority.

SGX-DC’s application to be registered as a derivatives clearing organisation in the US is “in progress”, the firm said, and the CFTC has already granted it specific no-action relief so that US customers can continue their current OTC clearing activities via SGX-DC until such time when the registration is complete.

Trading rise

SGX is continuing to rely on derivatives as volumes sustained their strong growth trend last quarter.

The bourse posted record daily average derivatives volumes for the quarter, up 30% from a year ago and 17% from the previous quarter.

“Our derivatives market achieved a record quarter with daily average traded volume of 358,532 contracts, following record volumes in our China A50 futures and Japan Nikkei 225 options,” said Magnus Bocker, CEO, SGX.

Meantime, securities daily average traded value for the quarter was S$1.2billion, while up year-on-year from S$1.1 billion, the figures were down 9% quarter-on-quarter from S$1.3 billion.

“Securities market continued to hold up from the first quarter and daily traded value increased 8% year-on-year,” said Bocker.

Securities revenue increased 9% in the quarter to S$57.8 million from S$53.2 million a year earlier, representing 36% of the bourse’s income, the same share as a year earlier.

However, derivatives grew as a share of revenue to 28% from 25% and increased 21% to S$45.7 million from S$37.7 million.

Futures and options total traded volumes jumped 32% to 22.2 million contracts from 16.8 million contracts, while revenue increased 23% to S$30.1 million from S$24.6 million.