SGX Q2 profits up 9% to $96.5m

Revenue from derivatives posted the largest increase of 35% YoY to $112.9m.

The Singapore Exchange’s (SGX) profits for Q2 FY 2019 jumped 9% YoY to $96.5m from $88.4m from last year, whilst revenue rose 9% YoY from $205m to $224.1m.

Amongst its businesses, derivatives revenue recorded the largest increase of 35% YoY to $112.9m from $88.3m which contributed 50% to the local bourse’s total revenue. Equity and commodities revenue also grew 23% as total volumes increased in tandem to 60 million contracts compared to 48.6 million contracts the year before. “This was mainly due to higher volumes in SGX FTSE China A50 futures and FX futures contracts,” the agency noted in a statement. “Average fee per contract was comparable at $1.06.”

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Likewise, market data and connectivity revenue jumped 6% YoY in Q2 to $25.7m from $24.2m, with market data revenue inching up 3% YoY to $10.7m from $10.4m and connectivity revenue climbing 9% to $15m from $13.7m. The increase in connectivity revenue was attributed to continued growth of SGX’s colocation services business, the firm explained.

On the other hand, equities and fixed income revenue which comprises of issuer services, securities trading and clearing, and post trade services dipped 12% YoY from $97.5m to $85.6m in Q2 FY 2019. Issuer services revenue declined 7% YoY to $19m, contributing 8% of total revenue.

SGX noted that there were a total of 296 bond listings which raised $122.3b in Q2, compared to the 289 bond listings last year which raised $103.5b. “We registered a total of three new equity listings which raised $19m, whilst secondary equity funds amounted to $1.9b, the local bourse added.

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Securities trading and clearing revenue also decreased 13% to $45.2m from $51.8m as securities daily average traded value (SDAV) dropped 14% YoY to $980m from $1.14b, with total traded value sliding 12% YoY to $62.7b. This was said to be made of equities where trade value slipped 14% to $57.2b, and other products where traded value edged up 7% YoY to $5.5m.

“We achieved a second consecutive quarter of record performance in our derivatives business with robust institutional demand for our risk management and hedging tools, including our MSCI Net Total Return index futures and FX futures contracts,” SGX’s CEO Loh Boon Chye said in a statement. “Meanwhile, investor sentiment was dampened by concerns on slower global economic growth and escalating trade tensions, which led to lower activity in our securities business along with other regional markets.”

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With regards to the company’s outlook for 2019, Loh said that SGX expects investors to actively seek risk management solutions and investment opportunities amidst the persistent global geopolitical and market headwinds.

“We will remain focused on developing Asian-centric solutions, including enhancing our securities and derivatives platforms to enable deeper client engagement,” he added.