Exchanges Expand Operations

Terry Flanagan

The SGX is the latest exchange operator to expand its operations as it looks toward other avenues for revenue.

The Singapore Exchange is planning to invest in new post-trade services as it looks to expand beyond domestic equities.

“We need to bring in new technology so we can add more products and services,” said SGX chief executive officer Magnus Bocker. “The current platform we have is focused largely on Singapore equities.”

The move for expansion comes amid speculation that the SGX is linking up with the London Stock Exchange to make a joint bid for the London Metal Exchange.

U.S. exchange operator Direct Edge recently announced that it had teamed with service provide Xignite to offer historical market data to customers. Exchanges have needed to adjust to an ever-changing environment, with some adapting better and quicker than others. There is increasing sentiment in the industry that the business of running an exchange and matching orders has reached a wall – what was once a lucrative operation has become commoditized.

NYSE Euronext has taken the approach of spinning off all of its technology operations into NYSE Technologies, which is now estimated to be a billion dollar business. It is providing and running trading technology and infrastructure, in some cases even for competing venues.

The SGX had made an attempt earlier in the year at a takeover of trans-Pacific counterpart Australian Securities Exchange. The bid was ultimately shot down in April after the Australian regulatory authorities rejected the offer, citing “national interest” issues.

Despite the failed bid, the SGX is keeping its options open with regard to any future mergers, acquisitions or partnerships.

“We are talking all the time,” said Bocker earlier in the month. “As a company which is serious about growing our shareholder value, we are always open to opportunities and commercial discussions, whether they are with new IPO candidates, or other exchanges, or like-minded partners.”

The Singapore Exchange recently announced its financial performance for the fiscal first quarter ended Sept. 30. It had profits of $74 million, a climb of 18 percent, on $159 million in revenue. This was in part because of strong average daily trading volume of $1.6 billion SGD, and in particular the $2 billion SGD during August.

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