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Asia Pacific Derivatives Exchange of the Year — Singapore Exchange

In January, Singapore Exchange (SGX) found itself centre stage when the Covid-19 pandemic began to flare up in China. With some Asian markets closed for Chinese New Year, investors dashed to it. “SGX was the only market open for China-proxy risk management and we saw impact across our derivatives shelf,” said Michael Syn, senior managing director at SGX.

By operating throughout the entire period, SGX, which has the longest trading hours in Asia, not only saw record dealing volumes but also became a benchmark for investors to understand how to price the market impact of the coronavirus. “The whole Covid-19 experience was not just about serving our Asian markets ecosystem. It was in a sense serving the global markets at a crucial and historic time,” says Syn. 

Its strategy has always been to provide international market infrastructure for Asian assets. “There is no limit to the potential demand for an institutional customer for trusted access to countries or assets where they don’t have full familiarity,” explains Syn. “The ultimate aim of every exchange is to become a one-stop shop, and to do that requires a constant forward momentum and to constantly ask what’s next.”

For SGX, that means evolving to offer to link and develop pools of liquidity. For example, last year SGX saw the time was right to promote and develop an onshore-offshore futures market bridge to Vietnam.

The exchange has also been building up liquidity in its new FTSE Taiwan futures. “Taiwan is globally important because it’s a tech sector bellwether and beneficiary of the 24-hour-a-day tensions between the US and China capital markets,” says Syn.

SGX has also tapped into the desire by institutional investors to adopt a factorised approach in their exposure to Asia. To this end, it has invested in Scientific Beta, an independent index provider specialising in smart beta strategies and factor-based solutions. “The next frontier of factors are ESG: environmental, social and governance,” says Syn. “In Asia, the ‘G’ aspect of this has been a driver of alpha.”

SGX will continue to adapt its approach as it evolves its product shelf to reflect changing investor requirements, whether in ESG or other areas. “Our derivatives offering needs to mirror this new lens that customers want,” says Syn.