SGX will look beyond equities to stay relevant, says chairman Kwa Chong Seng

SINGAPORE Exchange (SGX) must look beyond equity assets and focus on areas where it can be competitive, said SGX chairman Kwa Chong Seng.

Responding to questions at SGX’s annual general meeting on Thursday (Oct 6), Kwa said the bourse operator is unlikely to be able to compete with players such as the US exchanges for company listings given that Singapore is a “very small market”.

“We need to focus on where we can beat them, and not fight on areas where we can’t,” he said.

While SGX still welcomes small and medium-sized enterprises (SMEs) for financing, Kwa said the bourse operator is also focusing on other areas – such as foreign currencies and commodities – where it sees a competitive edge.

“Do we want to spend all our lives on SMEs listing? We really want to be an international exchange… Our role is not to save the SMEs,” Kwa said. He noted that even in the region, it is difficult to attract quality listings as the countries would prefer their companies list on their local bourses.

SGX chief executive Loh Boon Chye said the bourse operator had continued to diversify its product offerings and collaborated with different regions and countries during the financial year. For instance, SGX partnered the New Zealand Exchange to offer dairy derivatives.

For the full year ended Jun 30, SGX recorded an increase of 1.3 per cent in its net profit to S$451.4 million. Its revenue rose 4 per cent to S$1.1 billion.

Operating profit for its equities segment fell 2.6 per cent to S$405.2 million. But its fixed income, currencies and commodities segment jumped 29.8 per cent to S$53.1 million, while its data, connectivity and indices segment grew 7.3 per cent to S$79.2 million.

Loh said SGX’s derivatives platform saw high volumes across all asset classes in FY2022, and expects its over-the-counter foreign exchange business to achieve an average daily volume of US$100 billion in the medium term.

“It’s important to note that competition is not at the expense of collaboration,” Loh said in response to concerns about whether competitors will be willing to collaborate in hopes of further growth. Instead, collaborations can be a “win-win situation” for both partners.

Loh said the bourse operator’s focus is to realise its exchange partnerships and extend its engagement with end clients, digitalise financial markets, as well as work on sustainable investing efforts.

Kwa added that the bourse operator is “building for the future” with its investments, and asked shareholders to support its business transformation to be a global exchange.

“I will rather have a market that is more focused on long-term investments than on people trading,” Kwa said. “We are not a casino.”