Why Singapore's securities market will remain 'unexciting' this year

Trading volumes to taper off.

According to DBS, with making market orders and market-to-limit orders, as well as the introduction of price-triggered orders from 31 March, it believes trading volumes among the smaller cap speculative stocks will taper off.

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The move towards trading in mid-to-large cap stocks should see the value-to-volume ratio improve in the coming quarter but on a y-o-y basis, it would still be lower than that recorded in FYJun13.

New regulations in 4QFYJun14. The removal of the S$600 fee cap for contracts >S$1.5m will largely offset the lower clearing fees of 0.75bps (with effect from 1 June), which explains why this move is expected to be broadly neutral to SGX’s revenues. 

Other initiatives in the Joint Consultative Paper by SGX and MAS that set out proposals to strengthen the securities market will only be positive over time, positioning SGX as the ideal listing avenue in the region. Views and comments on the proposals will be made in the consultation paper by 2 May 2014.

Derivatives revenues to be its saving grace. With recent launches of an enlarged suite of derivatives products, this revenue stream will be SGX’s saving grace amid the unexciting securities market ahead. In April, SGX launched the clearing of Non-Deliverable Interest Rate Swaps in Malaysian Ringgit and Thai Baht.