FACED with its second straight declining quarter, Singapore Exchange (SGX) CEO Magnus Bocker sought to make a case for the sweeping changes that the market operator is pursuing.
"The importance of tightening spreads and making the market more liquid is urgent and important to us," Mr Bocker said at the market operator's third-quarter results briefing.
Net profit for the three months ended March 31 slumped 22.4 per cent to $75.8 million, or 7.09 cents per share, as operating revenue declined by 13.1 per cent to $165.6 million. Net profit margin slipped 5.5 percentage points to 45.8 per cent.
The company will declare an interim dividend of four cents per share for the quarter, in line with its year-ago payout.
The weak third quarter caused nine-month earnings to fall 2.1 per cent to $243 million, or 22.72 cents per share.
The securities market segment was particularly hit. Operating profit from the securities market segment fell 32.7 per cent to $53.1 million as daily average trading value during the quarter fell 27.7 per cent.
The derivatives market segment slowed 4.9 per cent in terms of operating profit, largely as a result of weaker interest in the Nikkei 225 futures contract, which saw exceptional growth a year ago amid optimism about the Japanese economy.
Mr Bocker said the slowdown in securities reflected thinner activity among retail investors despite a growth in the number of retail participants in the market.
Improving liquidity and market quality has therefore been a core focus for SGX, which over the past quarter introduced a raft of changes, including reduced fees and incentives for market makers and liquidity providers.
Mr Bocker, however, cautioned against too much optimism about the immediate impact of market makers that SGX hopes to sign on to the market from June.
"We should all be cognizant of the fact that it will take time to build this market," he said.
Mr Bocker sought to frame the past two quarters as a cyclical downturn, saying that "we are confident that our securities market will recover over time".
The initial public offering pipeline is stronger than the previous quarter, and remains "very robust", Mr Bocker said.
The growth in the number of retail participants is also encouraging.
On the derivatives side, SGX plans to introduce new China products, including yuan futures, soon, Mr Bocker said.
SGX shares closed at $6.94 yesterday before the results were announced, down 0.6 per cent or four cents.