Expect lower SGX clearing fees until 2020

Blame the reduction of clearing fees to 0.0325% of contract value.

Clearing fees in the Singapore Exchange (SGX) have been declining since 2014, where the reduction each year has been close to 16-20bps YoY, Maybank Kim Eng revealed.

According to a report, firstly, this could be attributed to the reduction in clearing fees from 0.04% to 0.0325% of contract value since June 2014 in order to improve liquidity and retail participation.

There is also the introduction of the market makers and liquidity providers (MMLP) to "bring in liquidity and improve depth of market" in June 2014. Fee rebates are also offered to MMLP to incentivize them to trade.

Maybank KE also saw a higher mix of products, including exchange traded funds (ETF) and daily leverage certificates (DLC).

The securities daily average value (SDAV) of these products rose from 3% of total SDAV in 2014 to 8% in the first quarter of 2018.

Maybank KE expects clearing fees to fall by 6-10bps YoY to 5.54 bps in 2018, 5.48bps in 2019, and 5.42bps in 2020.