IIAwards - Review of Singapore Exchange
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27 October
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As part of the recently announced IIAwards, in which we celebrate innovations in the fintech and crypto industry, today we will talk about Singapore Exchange and will analyze it from different points of view.

General information

Singapore Exchange Limited (SGX) is an investment holding company founded in 1999 and located in Singapore. It provides different services related to securities and derivatives trading and others. SGX is a member of the World Federation of Exchanges and the Asian and Oceanian Stock Exchanges Federation. As Asia’s pioneering central counterparty, SGX is globally recognized for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Products & Services - (3/5)

Singapore Exchange plays a key role in Asia's securities and derivatives market, offering the world's largest offshore market for Asian equities index derivatives. Its markets attract many overseas players, and approximately 40% of listed companies and 80% of listed bonds have their origins overseas. As of January 2019, the Singapore Exchange (SGX) has 640 mainboard listings and 215 catalist listings. Companies are only listed on the Singapore Exchange if they do well. If their average daily market capitalization is less than $40M over the last 120 market days, then it is placed on a watch-list, and if it does not improve within two years it is delisted from the Singapore Exchange.

The top 10 largest listed companies on the Singapore exchange accounts for approximately half of the total value by market capitalization and five of the largest according to market capitalization in descending order are: DBS Group Holdings; Jardine Matheson Holdings; Singapore Telecommunications; Oversea-Chinese Banking Corporation and United Overseas Bank. What is more, there are over 3,000 outstanding listed debt securities with over US$1T amount issued. There is also a trading floor for derivatives and indices. What is more, SGX operates the most liquid, offshore marketplace for trading the major equity indexes of China, India, Japan and the Association of Southeast Asian Nations (ASEAN). The exchange plays an important role in providing liquidity in the Asian marketplace.

Technological advancement - (4/5)

The Singapore Exchange launched SGX QUEST (SGX Quotation and Execution System) in August 2004 for derivatives trading. SGX QUEST provided SGX with an integrated trading engine for securities and derivatives trading that supported a range of new products including Nikkei 225 Futures and Options during the main Japanese trading hours, and sophisticated trading strategies. SGX QUEST replaces Singapore Exchange's old derivatives trading engine, SGX ETS (Electronic Trading System). The launch of the new trading engine in the Exchange's derivatives market completes the first phase of developing an integrated trading engine for its securities and derivatives market. SGX QUEST will allow participants to trade a wider range of derivatives instruments electronically on SGX, and accelerate the progress toward introducing more electronic-based derivatives products. SGX QUEST offers a platform for global connectivity and broadens its reach to market intermediaries and investors.

Trading characteristics - (2/5)

The Singapore Exchange is not open on weekends. Stock Exchanges in America, Europe and Asia follow the typical Monday to Friday schedule. However, in the Middle East the workweek typically runs from Sunday through Thursday. The Singapore Exchange closes for lunch each day at 12:00 PM and reopens for after lunch trading at 1:00 PM. The daily lunch break is 1 hour per day. SGX offers a comprehensive suite of data products for market participants including: Real-time price feeds; Historical data and Reference data. Additionally, SGX delivers customized indexing products across a range of asset classes.

Regulation - (4/5)

SGX oversees the regulation of the exchanges and clearinghouses it operates, and in that role, functions as a self-regulatory organization (SRO). In addition, SGX works closely with three outside agencies that have regulatory oversight in the securities industry:

  • The Monetary Authority of Singapore (MAS): An integrated supervisor overseeing all financial institutions in Singapore — banks, insurers, capital market intermediaries, financial advisors, and the stock exchange.
  • The Commercial Affairs Department (CAD): Part of the Singapore police force that supports the nation’s Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) framework.
  • The Accounting and Corporate Regulatory Authority (ACRA): The national regulator of business entities, public accountants and corporate service providers.

What is more, the exchange is listed on its own bourse.

Novelties

On January 21, 2020, Singapore Exchange (SGX) was listed in the Bloomberg Gender-Equality Index (GEI) for the first time in recognition of gender equality, as well as its commitment to diversity and board representation. The index of 325 companies was announced on Tuesday (January 21) and aims to help investors evaluate how firms are tackling gender equality in the workplace and in their local communities.

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