Singapore Exchange Ltd, Southeast Asia's biggest bourse, will hire more people in China as it seeks to sell more of its products in Asia's largest equities market, Chief Executive Officer Magnus Bocker said.
SGX will appoint a senior executive in China to build its business and relationships, Bocker said in an interview last week. The bourse posted its first quarterly profit growth in more than a year in the third quarter of 2014 after a world-beating rally in Chinese stocks spurred demand for hedging instruments. Revenue from derivatives jumped 46 percent, spurred by a 183 percent surge in volume on Chinese stock futures, according to the exchange.
SGX wants more global investors to use its Chinese products, "whether it's China A50, indexes or commodities," Bocker, 53, said at SGX headquarters. "We need to grow our headcount in China. We will more than double what we have today in the next few years."
Bocker said that SGX's performance will depend on its ability to attract new clients and sell more products to existing customers, emphasizing the need to have a presence in key markets. The bourse has sales and marketing offices in Beijing, Hong Kong, Tokyo, Mumbai and London.
Longer term, the exchange will look at opportunities to tap North America, the world's biggest derivatives market, Bocker said.
"The number of new clients using our products is very high and we're not losing the old ones," Bocker said.
Derivatives transactions climbed 52 percent to 40 million in the fiscal second quarter, with trading of FTSE China A50 futures increasing to more than 17 million contracts, according to SGX. China A50 contracts, which track the country's 50 biggest stocks, along with those for Japan, India and iron ore, are among SGX's most actively traded derivatives.
There are about 40 companies seeking approval from the US Securities and Exchange Commission to introduce exchange-traded funds that will invest in the China stock market and these ETF providers would be potential clients for A50 futures, Bocker said.
The Southeast Asian bourse plans to start a bond trading platform by the middle of this year, to complement its equities, commodities and foreign-exchange products.
"We don't have an international bond market in Asia," Bocker said. "The investors that we meet are looking for quotes that are cross-border. We believe that SGX can play a much stronger role in the fixed-income market."
To strengthen its derivatives business, SGX said last month it will increase technology-related spending by S$20 million ($14.8 million) to as much as S$75 million this year as it accelerates the upgrade of its trading and clearing platform. This would enable the bourse to handle more derivatives transactions and operate on a 24-hour basis by the end of 2016.
The exchange currently trades equity-index and commodities futures for more than 18 hours on weekdays.
"The outlook for derivatives is looking very bright," Benjamin Ong, an analyst at Phillip Securities Pte in Singapore, said by phone. "Demand for China A50 remains strong given the positive interest in China equities."
The bourse decided to upgrade its platform after experiencing its second trading disruption in less than a month in December, prompting the Monetary Authority of Singapore to say it will take supervisory action if needed. An independent committee formed to investigate the incident will probably submit its findings in March.
"It's our job to keep the markets open," Bocker said. "Any disruption is very serious for us. We need to really learn from that."