08.18.2022

SGX Reports Record Revenue

08.18.2022
SGX Reports Record Revenue

Singapore Exchange (SGX Group) reported FY2022 adjusted net profit of S$456.4 million (S$446.9 million). Total revenue increased 4% to S$1,099.0 million (S$1,056.0 million) – the highest ever since listing. Excluding treasury income[1], total revenue grew 7% to S$1,049.5 million (S$981.4 million).

Adjusted EBITDA was S$637.8 million (S$623.9 million) while adjusted earnings per share stood at 42.7 cents (41.8 cents).

The Board of Directors has proposed a final quarterly dividend of 8.0 cents (8.0 cents) per share, payable on 21 October 2022, for approval at the forthcoming annual general meeting. If approved, this brings total dividends in FY2022 to 32.0 cents (32.0 cents) per share.

Loh Boon Chye, Chief Executive Officer of SGX Group, said, “Our record-high revenue was driven by higher derivatives volumes across equities, currencies and commodities, as our global customers increasingly used our multi-asset platform to navigate market uncertainties. Our fixed income, currencies and commodities (FICC) business remains a key growth engine and is expected to deliver mid-teens percentage revenue growth in the medium term.”

With the acquisition of MaxxTrader in January 2022, coupled with contributions from BidFX, OTC FX average daily volume (ADV) grew 64% year-on-year in FY2022 to US$70.6 billion and is on track to achieve an ADV of US$100 billion in the medium term. The OTC FX pillar[2] now contributes 5% of SGX Group’s total revenue.

Commenting on the outlook for FY2023, Mr Loh said, “We will build on this momentum to scale our already significant standing in commodity and FX futures. As portfolio management needs evolve, we are sharpening our equities product suite to stay at the forefront of global investing trends. With our expanded global network and connectivity, we are well-positioned to capitalise on capital market opportunities when conditions are more conducive.”

With increasing risks in the global economy, portfolio risk management activity is expected to rise in tandem. Notwithstanding these risks, SGX Group maintains its medium-term revenue growth expectation of a high single-digit percentage range. Treasury income has bottomed out following interest rate hikes by major central banks and is poised to recover in FY2023.

Results Summary

Fixed Income, Currencies and Commodities (FICC)

FICC revenue – comprising Fixed Income as well as Currencies and Commodities revenues – increased 19% to S$252.7 million (S$211.8 million), accounting for 23% (20%) of total revenue.

Fixed Income revenue declined by 18% to S$12.2 million (S$14.9 million).

  • Listing revenue: S$8.7 million, down 24% from S$11.5 million
  • Corporate actions and other revenue: S$3.5 million, up 2% from S$3.4 million

There were 1,179 (795) bond listings with amounts issued of S$429.6 billion (S$389.1 billion) a year earlier.

Currencies and Commodities revenue increased 22% to S$240.6 million (S$196.9 million), accounting for 22% (19%) of total revenue. Excluding MaxxTrader, Currencies and Commodities revenue would have increased by 16%. OTC FX revenue was S$58.4 million, an increase of 47% from S$39.7 million a year ago.

  • Trading and clearing revenue: S$183.9 million, up 21% from S$152.6 million
  • Treasury and other revenue: S$56.7 million, up 28% from S$44.3 million

Trading and clearing revenue grew mainly due to increased volumes in commodity and currency derivatives and higher contribution from OTC FX, which includes the acquisition of MaxxTrader in January 2022.

Commodity derivatives volumes increased 21% to 30.3 million contracts (25.1 million contracts), while currency derivatives volume increased 10% to 28.5 million contracts (25.8 million contracts). OTC FX average daily volume (ADV) increased 64% to US$70.6 billion (US$43.1 billion).

Treasury and other revenue increased mainly due to higher margin balances and the consolidation of license, hosting and market data revenue from MaxxTrader.

Equities

Equities revenue – comprising Equities – Cash as well as Equities – Derivatives revenues – was comparable at S$698.9 million (S$701.1 million), accounting for 64% (66%) of total revenue.

Equities – Cash revenue dipped 6% to S$388.4 million (S$412.7 million), accounting for 35% (39%) of total revenue.

  • Listing revenue: comparable at S$34.8 million (S$34.5 million)
  • Corporate actions and other revenue: S$28.1 million, down 14% from S$32.5 million
  • Trading and clearing revenue: S$209.7 million, down 9% from S$230.2 million
  • Securities settlement and depository management revenue: S$108.3 million, up 2% from S$106.6 million
  • Treasury and other revenue: S$7.6 million, down 14% from S$8.8 million

There were 17 (11) new equity listings in FY2022, raising S$1.9 billion (S$1.0 billion). Secondary equity funds raised were S$5.7 billion (S$16.9 billion).

Daily average traded value (DAV) and total traded value declined 6% to S$1.27 billion (S$1.35 billion) and S$320.8 billion (S$340.1 billion) respectively.  This was made up of Cash Equities[3], where total traded value decreased by 6% to S$308.1 billion (S$329.1 billion), and Other Products[4], where traded value increased 16% to S$12.7 billion (S$11.0 billion). There were 252 (252) trading days in the year.

Overall average clearing fees declined 5% to 2.56 basis points (2.68 basis points). Average clearing fees for Cash Equities decreased 4% to 2.62 basis points (2.73 basis points) due to higher participation from market makers. Average clearing fee for Other Products decreased 6% to 0.99 basis points (1.06 basis points) due to a change in product mix. Overall turnover velocity for FY2022 was 42% (48%).

Securities settlement and depository management revenue increased mainly from higher accounts maintenance fees due to the growth in the number of sub accounts.

Equities – Derivatives revenue increased 8% to S$310.4 million (S$288.4 million), accounting for 28% (27%) of total revenue.

  • Trading and clearing revenue: S$281.9 million, up 22% from S$230.9 million
  • Treasury and other revenue: S$28.6 million, down 50% from S$57.5 million

Trading and clearing revenue increased mainly due to higher average fees and volumes from SGX FTSE China A50 and SGX Nifty 50 Index futures.

Treasury and other revenue decreased mainly from lower treasury income, which declined primarily due to lower net yield.

Average fee per contract for Equity, Currency and Commodity derivatives was higher at S$1.51 (S$1.34) mainly due to higher fees realised from SGX FTSE China A50 Index futures and SGX Nifty 50 Index futures.

Data, Connectivity and Indices

Data, Connectivity and Indices revenue increased 3% to S$147.4 million (S$143.1 million), accounting for 13% (14%) of total revenue.

  • Market data and Indices revenue: S$82.9 million, up 3% from S$80.6 million
  • Connectivity revenue: S$64.5 million, up 3% from S$62.5 million

Market data and indices revenue increased 3% mainly due to an increase in data subscription. Connectivity revenue increased 3% mainly due to an increase in subscription to our co-location services.

Total expenses increased 7% to S$561.6 million (S$525.2 million). Excluding MaxxTrader and one-off government job support scheme, total expenses increased by 3%.

Operating expenses increased 8% to S$464.9 million (S$430.7 million) mainly from higher staff costs, technology expenses and royalties. Excluding OTC FX and Scientific Beta, operating expenses would have increased 6% to S$403.0 million (S$381.9 million). The average headcount for the year was 1,064 (970), including 90 staff from MaxxTrader.

Depreciation and amortisation increased 2% to S$96.7 million (S$94.5 million) mainly from OTC FX.

Adjusted total expenses, which exclude amortisation of purchased intangibles, acquisition-related expenses and other one-off items, increased 6% to S$543.8 million (S$513.6 million).

Total capital expenditure in FY2022 was S$54.6 million (S$51.1 million). These investments were mainly for the setup of infrastructures for Gujarat International Finance Tec-City (GIFT) Connect and BidFX, and upgrades to the Titan OTC trade reporting system.

As we execute our growth plans, we will continue to invest in maintaining the resilience of our platforms. Total expenses in FY2023 are anticipated to grow in the 7-9% range, of which two percentage points is due to the full-year impact of MaxxTrader consolidation. The increase will mainly be from building our OTC FX business, wage adjustments due to cost inflation, and hiring activities that were deferred in FY2022.

Capital expenditure in FY2023 is expected to increase to S$70-75 million and will likely remain at similar levels in the medium term as we embark on major system upgrades.

Source: SGX

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