What changed in your business over the last year and what was your biggest achievement?
Last year unfolded with a pronounced increase in market uncertainty, which drove risk management and trading activity across our equities, currencies and commodities suite. With Asia contributing about two-thirds of global growth, investors around the world have also been looking for alpha opportunities in this region.
Notably, our efforts to expand our geographical reach in the U.S. and Europe have led to rising investor interest in our flagship derivative products. Focused expansion of our multi-asset business has not only diversified opportunities for our global customers, but also affirmed SGX Group’s reputation as the trusted and efficient marketplace that caters to the evolving needs of international investors.
We have had many achievements across our business that I am proud of, but if I must highlight one, it would be our cross-border collaborations. Fostering greater connectivity has always been in our DNA. In 2023, our partnerships with exchanges in India, China and Thailand reached new milestones as we enabled international investors to access these markets with greater ease. These alliances have strengthened regional ties and facilitated the exchange of expertise, contributing to the overall growth of the ecosystem.
As Chairman of WFE – a role that I am honoured to take on for the next two years – I cannot emphasise enough the importance of collaboration within the ecosystem. Exchanges have tremendous influence and the ability to make transformative improvements in the financial markets if we pull our strengths together. I would like to encourage WFE members to continue to work closely with the WFE team and with each other, to advance and futureproof the ecosystem.
What is your most important project this year (regulatory or otherwise)?
One of SGX Group’s most impactful endeavours was the culmination of our NSE IX-SGX GIFT Connect, which went fully operational in July 2023 with $9 billion open interest in Nifty futures and options.
It was a groundbreaking, pivotal four-year project between SGX Group and the National Stock Exchange of India (NSE) – one where we pioneered a new trading and clearing model, coalesced regulators in Singapore and India and overcame regulatory complexities, and developed a robust infrastructure that redefined India access for both onshore and offshore market participants. The GIFT Connect is also the first cross-border initiative connecting Singapore and India’s capital markets.
With the GIFT Connect, we have simplified the complexities of cross-border trading and opened up manifold opportunities for international investors to access one of the world’s fastest-growing economies. It stands as a testament to the power of exchange alliances, ushering in a new era of accessibility for global investors.
What are you most excited for in 2024?
SGX Group has been simplifying Asia for global investors for decades. 2024 will be another exciting year for the region as investors keep a close watch on developments in the economic powerhouses of China, India, and the burgeoning ASEAN region. With the highly idiosyncratic risks in Asia, we remain the trusted gateway to facilitate seamless access and harness international capital flows from investors seeking exposure to the thriving markets in this region.
In 2024, we will celebrate SGX Group’s Silver Jubilee. Our 25 years of experience was built on the strong foundation of Singapore International Monetary Exchange (SIMEX) and the Stock Exchange of Singapore whose roots go back 40 and 50 years, respectively.
Our pioneers had a vision to build a vibrant, globally connected marketplace, rooted in the heart of Asia. Today, that vision has not changed. Our commitment to enhancing connectivity and efficiency remains unwavering, so that investors worldwide can navigate and capitalise on the myriad opportunities presented by the dynamic Asian markets.
What are your biggest opportunities?
Among the many opportunities that we are unlocking, I am particularly excited about our currencies and commodities businesses where we are observing new inflection points.
Risk management for commodities has been increasingly crucial as commodity prices continue to see higher highs and lower lows, driven by inflation and continued geopolitical tensions. Iron ore, as a linchpin to fast-growing and industrialising Asia, is one of the few essential resources that will always require transparent price discovery in a highly liquid trading venue.
In the past decade, we have supported and built the global iron ore community by expanding the ecosystem beyond physical traders to include financial participants. Last year, we cleared the equivalent of a staggering 4.4 billion metric tonnes of physical iron ore. What is exciting is that we are just skimming the surface, as iron ore is the first global commodity to emerge from Asia that is gaining recognition as a macro proxy for global economic cycles.
Additionally, the $7.5 trillion-a-day global FX market continues to be a source of growth opportunities. Since we expanded into the FX OTC market with the successful acquisition and integration of BidFX and MaxxTrader, our FX OTC business has gained significant ground to become one of the top five global OTC FX exchange-backed platforms. Our global customers see the value of our unique offering as the world’s most liquid Asian FX futures exchange with best-in-class OTC FX workflow electronification and automation solutions.
SGX is at the forefront of the electronification and digital transformation of the FX industry, and we are working hard to solidify our position as the most comprehensive venue in Asia for trading and risk-managing major currencies across FX instruments.
What do you see as the key themes and trends for your exchange and market infrastructure in 2024?
As we step into 2024, themes around diversification, innovation, connectivity and sustainability will continue to shape market infrastructures.
Diversification stands out as a key theme. Exchanges and market infrastructures are expanding their offerings beyond traditional asset classes to include digital assets and exploring new revenue opportunities in data and analytics.
Along with this comes an accelerated push for new technologies like blockchain, artificial intelligence and machine learning. Technological innovation remains key to enhancing trading and settlement, driving operational efficiency, reducing latency, and bolstering security across market infrastructures.
Mutual market connectivity is emerging as a critical enabler, especially for harder-to-access markets. Exchanges recognise the need to forge strategic partnerships to create a more frictionless global marketplace, fostering greater access for market participants and promoting liquidity across different markets.
Sustainability will continue to take centre stage. More and more exchanges are stepping up to facilitate the transition to a net-zero economy, reflecting the broader industry shift toward sustainable investing and aligning financial activities with climate goals. SGX Group sees tremendous potential in transition finance, which is not only an ethical imperative but a strategic opportunity.
Resilience remains a non-negotiable priority. Market infrastructures are fortifying their capabilities to withstand external shocks ranging from extreme market volatility to cyber risks, so as to ensure operational continuity in the face of disruptions. For effective response and recovery, there must be close cooperation and coordination among exchanges and market participants.
As always, exchanges should expect and be prepared for the unexpected. Working closely with the WFE team and members will go a long way in building a resilient, adaptive, sustainable and forward-looking ecosystem that can respond dynamically to changing trends that come our way.
The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.