Q&A with Loh Boon Chye, CEO, Singapore Exchange (SGX)
1. SGX hosted the 59th WFE General Assembly & Annual Meeting. What was the significance of hosting this event to SGX, Singapore and the region as a whole?
It was inspiring to have so many industry leaders and decision makers from around the world come together in Singapore. There were 300 representatives from 60 countries, speaking numerous languages. Any ideas to improve our financial system will be difficult to achieve unless we have a common vision. Through the WFE, we have a platform to foster a common vision and a collective desire to work together for the benefit of our industry.
We live in interesting times, when opportunities created by technology and internationalisation are also paired with disruption, market volatility and political risks. This calls for exchanges to work together and create solutions that will help chart the way forward.
Amid the uncertainty, one thing we are certain of is that Asia will continue to lead global growth. Singapore, as a global financial and trade centre, is a key facilitator of this growth. SGX, too, connects Asia and the world, providing access solutions covering 99% of Asia’s GDP.
Hosting this event in Singapore was an incredible opportunity for our country and SGX. As our industry evolves, SGX is ready to be a key part of this change, not least by working together with our peers and partners to form alliances and enable greater connectivity between markets and participants.
2. The WFE’s 59th General Assembly & Annual Meeting addressed many crucial topics impacting global capital markets. What were your three key takeaways from the conference?
I had several thought-provoking and encouraging conversations with peers and industry colleagues. The following three things stood out for me:
Firstly, sustainability is no longer an emerging trend. It is a conversation that all of us, including our listed companies and industry stakeholders, need to be a part of. Working towards – and achieving – a sustainable financial future is in our hands, but our window of opportunity to drive real change is narrowing and we have to act now.
As market operators, exchanges are uniquely positioned to lead. We believe sustainable reporting is a better reflection and driver of value creation, because when businesses take responsibility for their environment, social and governance (ESG) outcomes, they can further deliver corporate success.
Secondly, our industry is undergoing changes mainly driven by technology, which will substantively affect the way markets operate. The ABCD (Artificial Intelligence, Blockchain, Cloud, Data) of technology have profound implications on our industry. If embraced, technology has the opportunity to power us forward. If we fail to see and understand the opportunities, and are slow to invest and utilise the right technologies and systems, we could be left behind.
Thirdly, I felt a collective sense from participants that we all saw the value in closer collaborations, whether official or informal. This also cuts across themes such as sustainability or technology, and functional areas, such as in setting common standards or product development. To successfully navigate and address opportunities, trends and challenges, we must foster partnerships to build greater networks and ecosystems – all of which will be stronger and more impactful than any individual effort.
3. SGX was named the 'Derivatives Exchange of the Year' by Asia Risk for the sixth consecutive year. What factors contribute to SGX’s success in this space?
The needs and expectations of our clients continue to be our number one priority. We are grateful that the industry recognises our innovation and commitment to help clients in their portfolio investment and risk management.
The judges commended our launch of Asia’s first portfolio compression service from over-the-counter (OTC) products to listed derivatives, as well as our FlexC FX Futures solution which bridges the standardised futures and bespoke OTC worlds.
It is not just SGX’s efforts, but also our members and partners who drive excellence in the derivatives sector. This accolade is a testimony to their efforts and SGX’s commitment to provide innovative solutions and an open, single-point access to Asia.
As a global, multi-asset exchange, we have to provide international investors with unfettered and efficient access to Asian emerging markets through tailored products, across multiple asset classes. This is particularly important as investors navigate increasingly challenging global markets.
4. What are SGX’s strategic priorities for the final quarter of 2019?
Our financial year begins in July, so we have just reported our first quarter results for FY2020. We had a strong start to FY2020, with robust performance across all key financial metrics and the highest quarterly net profit in more than 10 years.
This is our first set of results following our re-organisation in July – along asset classes of equities; fixed income, currencies and commodities (FICC); as well as data connectivity and indices (DCI) – to capitalise on our strengths as an international multi-asset exchange.
Since we embarked on our strategic priorities of building a multi-asset exchange, growing our international presence, and deepening partnerships and networks in FY2018, we have made progress. A quarter of our clients have increased the number of asset classes that they trade with SGX. Over the same period, we saw overnight trading grow from 10% of our total derivatives volumes, to 18% this quarter.
We are working to grow our FICC and DCI businesses at a faster pace in the next few years. In Q1, we achieved record FX future volumes, reinforcing our position as the largest and fastest growing Asian FX futures venue. Our growing strength in Asian commodities and freight is also driving synergies between global trade and transport marketplaces.