Singapore Exchange (SGX)

Do let me know if I'm simplifying the calculation:
- About 12% of SGX’s derivatives business revenue comes from Nifty Index Futures & Options (Based on H2 results)
- Derivatives account to 41% of SGX's H2 revenue
- Based on a very simplified calculation, removing 12% revenue from India results in about 4-5% revenue drop

As per Business Times, under NSE's existing contract with SGX, the Indian bourse must give SGX a six-month notice period, hence there are still revenue flowing from India this FY18.

(12-02-2018, 09:34 PM)mkmk Wrote: Do let me know if I'm simplifying the calculation:
- About 12% of SGX’s derivatives business revenue comes from Nifty Index Futures & Options (Based on H2 results)
- Derivatives account to 41% of SGX's H2 revenue
- Based on a very simplified calculation, removing 12% revenue from India results in about 4-5% revenue drop

As per Business Times, under NSE's existing contract with SGX, the Indian bourse must give SGX a six-month notice period, hence there are still revenue flowing from India this FY18.

hi mkmk,
I assume you are taking from the table in page4.
Size of the contract (number of contracts) cannot be directly translated into revenue, since the products are not the same (consist of equity futures/options, FX pair futures and commodity products) and have different margins. The only knowledge i have is that generally China A50 futures have lower margins (lower fee per contract)

A few other thoughts:
- SGX is much a business with fixed costs that is easily scale-able (marginal costs are low). So the downside of this model is when your revenue reduces, (fixed) costs wouldn't reduce as much. The impact of losing a "source of revenue" is greater than it may seem.
- SGX and India have worked for some time now and with this u-turn, what about the other products? There are FTSE, Nikkei and MSCI indices - FTSE/MSCI originates from profit-driven index generating firms on "3rd party countries" and so it should be relatively ok. As for Nikkei, seems to be generated/owned by a Financial Times Newpaper Nihon Keizai Shinbun tracks the TSE. TSE does own a ~5% stake in SGX and more importantly, i reckon the Singapore market is too small relative to the local onshore market in the first place!

(14-02-2018, 06:36 AM)weijian Wrote:

(12-02-2018, 09:34 PM)mkmk Wrote: Do let me know if I'm simplifying the calculation:
- About 12% of SGX’s derivatives business revenue comes from Nifty Index Futures & Options (Based on H2 results)
- Derivatives account to 41% of SGX's H2 revenue
- Based on a very simplified calculation, removing 12% revenue from India results in about 4-5% revenue drop

As per Business Times, under NSE's existing contract with SGX, the Indian bourse must give SGX a six-month notice period, hence there are still revenue flowing from India this FY18.

hi mkmk,
I assume you are taking from the table in page4.
Size of the contract (number of contracts) cannot be directly translated into revenue, since the products are not the same (consist of equity futures/options, FX pair futures and commodity products) and have different margins. The only knowledge i have is that generally China A50 futures have lower margins (lower fee per contract)

A few other thoughts:
- SGX is much a business with fixed costs that is easily scale-able (marginal costs are low). So the downside of this model is when your revenue reduces, (fixed) costs wouldn't reduce as much. The impact of losing a "source of revenue" is greater than it may seem.
- SGX and India have worked for some time now and with this u-turn, what about the other products? There are FTSE, Nikkei and MSCI indices - FTSE/MSCI originates from profit-driven index generating firms on "3rd party countries" and so it should be relatively ok. As for Nikkei, seems to be generated/owned by a Financial Times Newpaper Nihon Keizai Shinbun tracks the TSE. TSE does own a ~5% stake in SGX and more importantly, i reckon the Singapore market is too small relative to the local onshore market in the first place!

Thank you for clarifying on my simplified points. I do agree with the 'losing the source of revenue is greater than it may seem' portion. As covered in a Goldman Sachs report, this might impact volumes of other derivatives as well. (Of cos, do take research reports with a pinch of salt)

In my opinion, this is a swift response from SGX - ensuring the customer experience is not affected and yet not burning bridges with your supplier.

Update on SGX India Equity Derivatives

SGX announced today that it will list successor products to its SGX Nifty family of products before August 2018. This will provide market participants with the same ability to invest and maintain their risk exposure to the Indian capital markets. Market participants will be able to transition seamlessly to these products before the expiry of SGX’s licence agreement with the National Stock Exchange of India (NSE).

In the meantime, the SGX Nifty family of products can continue to list, trade and clear uninterrupted on SGX until August 2018 at a minimum, supported by the current licence agreement with NSE. Concurrently, SGX will continue to work with NSE to develop a link that will allow international market participants to trade on NSE’s International Exchange (NSE IFSC Limited) in Gujarat International Finance Tech (GIFT) city – International Financial Services Centre, while managing their clearing exposures through SGX. SGX believes that such a link will increase participation in GIFT and on SGX.

“As a market operator, we have an obligation to our international clients to provide them with solutions to manage their risks. Our successor products will provide certainty and continuity for our clients. At the same time, we continue to work with NSE to create a larger pool of liquidity comprising international and home market participants,” said Michael Syn, Head of Derivatives, SGX. Details of the successor products and progress on the link will be communicated by March 2018.

http://infopub.sgx.com/FileOpen/20180219...eID=489433

SGX said to express interest in acquiring Tel Aviv Stock Exchange

By: Michelle Zhu
01/03/18, 10:47 am

SINGAPORE (Mar 1): The Singapore Exchange is said to be among a number of foreign stock exchanges to express an interest in acquiring a controlling share in Israel’s Tel Aviv Stock Exchange (TASE).

Earlier this year, it was announced that TASE CEO Ben Zeev received authorisation from shareholders, who hold an aggregate 71.7% of the bourse, to mediate the sale of their shares to a third party.

Although the price has yet to be discussed or determined, TASE will only be allowed to benefit from up to NIS 500 million ($190 million) for its sale according to the law.

More details in https://www.theedgesingapore.com/said-ex...k-exchange

Singapore Exchange brings dual-class IPO battle to Hong Kong, offers better listing terms


Singapore Exchange officials say two massive Hong Kong-based companies plan to list around July and August


http://www.scmp.com/business/money/stock...-hong-kong

Singapore Exchange (SGX) expects to let the first company with a dual-class share structure list in the second half of this year as it looks to complement the Chinese onshore and Asian capital markets in allowing tech firms to raise funds, bourse officials told a media briefing in Hong Kong on Friday.

Chew Sutat, executive vice-president of SGX said that a couple of “multibillion-dollar market cap” companies from Hong Kong are planning to list in Singapore in July and August, including one with a have a dual-class listing structure that has operations in Hong Kong, Southeast Asia and China.

Singapore Bourse to Ease Rules in Pursuit of Tech IPOs

By Andrea Tan
March 12, 2018, 3:09 PM GMT+8

Singapore Exchange Ltd. is stepping up efforts to bring technology companies to its market.

The bourse last year proposed allowing dual-class shares, a structure favored by tech founders because it lets them keep control after going public. Now SGX wants to loosen some of the restrictions it planned to impose on dual-class listings, such as a minimum market cap, according to people with knowledge of the deliberations who asked not to be named.

Making dual-class shares easier to adopt is an attempt to make Singapore more competitive with exchanges in the U.S., which have in recent years listed Chinese tech companies that now have a combined market value of about $785 billion, according to data compiled by Bloomberg. China is also joining the race to draw more tech initial public offerings, while Hong Kong is pitching that it too will allow dual-class

SGX’s latest proposals, which are expected to be published as a public consultation this month, would eliminate an earlier recommendation that dual-share listings have a market value of at least S$500 million ($380 million), the people said. A proposed rule that such companies have to be traded on the main venue will also be dropped, they said. The initial consultation was published in February 2017, and the rules have yet to take effect.

More details in https://www.bloomberg.com/news/articles/...ease-rules

Japan Exchange Group to sell its 4.95% stake in SGX progressively over three years
FRI, MAR 30, 2018 - 4:51 PM

Japan Exchange Group (JPX) said on Friday that it will sell its 4.95 per cent stake in Singapore Exchange (SGX) progressively over a period of about three years.

The introduction of Japan' s Corporate Governance Code in 2015 requires listed companies in Japan to examine and explain the economic rationale and future outlook of holding shares of other listed companies for reasons other than pure investment purposes, JPX said.

" Following a review of the requirements under the Code, JPX reached the conclusion that the existing cooperative relationship with SGX would continue even without holding the shares of SGX.

" Therefore, JPX has decided to sell the shares sequentially over a period of approximately three years," JPX said in its announcement.

http://www.businesstimes.com.sg/companie...hree-years

Singapore Exchange (SGX) and Tel-Aviv Stock Exchange (TASE) Establish Partnership to Grow Cross-Border Capital Raising Opportunities for Technology Companies
Partnership complements efforts by the exchanges to boost their respective technology sector listings

Singapore Exchange (SGX) and The Tel-Aviv Stock Exchange (TASE) today announced that they have established a partnership focused on growing capital raising opportunities for companies, particularly in the technology sector.

The two exchanges will work together to support technology and healthcare companies which are looking to tap the capital markets to fund their growth plans in Asia and globally. The two exchanges will pro-actively engage with technology companies seeking to penetrate Asian markets, to list on both exchanges. This will include assisting companies during the pre-listing stage, facilitating the listing process, and providing issuers with post-listing support by leveraging the exchanges’ network and platforms.

More details in http://infopub.sgx.com/FileOpen/20180514...eID=505430

Biggest India Stock Exchange Sues Singapore Bourse

By Andrea Tan  and Santanu Chakraborty
May 22, 2018, 10:10 AM GMT+8 Updated on May 22, 2018, 1:27 PM GMT+8

The National Stock Exchange of India Ltd. sued Singapore Exchange Ltd. in a Mumbai court, escalating a dispute that threatens to leave international investors without one of the world’s most widely used offshore futures contracts.

NSE is trying to stop its Singapore counterpart from launching derivatives that could replace the Nifty 50 contracts that have traded in the city-state for 18 years. Global funds use these instruments to hedge their positions in one of Asia’s biggest equity markets. Indian exchanges ended agreements that allowed offshore derivatives in February, leaving SGX and others scrambling.

“This is a big mess,” said David Shin, Asia head of global equity derivative sales at TD Securities in Singapore. “I can’t see how SGX would go through with the launch when this is in the air. There’s a lot of gray here, because if investors do trade the new contract knowing this legal case is out there, is there legal liability that cuts through to the investors of the new contracts?”

SGX, which announced the NSE’s legal action in a statement on Tuesday, said it has “full confidence” in its legal position and would “vigorously” defend itself.

More details in https://www.bloomberg.com/news/articles/...t-products