Magnus Bocker joined the Singapore Stock Exchange (SGX) as chief executive in December. Since then, SGX has enhanced its relationship with the National Stock Exchange (NSE). With nearly 25 years of experience in the exchange industry that includes a stint with Nasdaq OMX, Bocker tells Ashish Rukhaiyar that he is exploring listing of more India-linked products. Excerpts:
SGX intends to become a global gateway for trading Asian equities, commodities and financial derivatives on a variety of platforms. What does this mean for the investor community?
SGX is constantly seeking opportunities with like-minded partners to give its global customers greater access to our market and more product choices in line with the growing interest and appetite for more asset classes such as equity derivatives and commodities.
As one of the 10 largest exchange operators in the world and the second-largest in Asia, SGX is well-placed to expand its offerings to become a global gateway for trading Asia equities, commodities and financial derivatives. A part of our efforts to enhance accessibility was extension of trading hours for our derivatives market to 1 am (Singapore time). With this, our derivatives markets will trade past the close of the London market. This will allow customers to better manage their risk arising from news and market movements during European and US trading hours.
Nifty options will soon be available on SGX. How do you intend to expand your relations with Indian exchanges?
We recently announced a collaboration with NSE, offering Nifty options and related products. With this, we can expect to offer our global customers options on the S&P CNX Nifty Index in 2010 and derivatives on other Nifty-related indices thereafter.
We will continue to work with partners to give customers greater access to these opportunities in India, as well as explore listing of more India-linked products. For investors in both countries, a seamless linkage, if and when it materialises, will offer more direct and cost-efficient trading, hedging and risk management opportunities.
Nifty futures will soon be traded on the Chicago Mercantile Exchange (CME), too. Do you think this will impact investor interest in Nifty futures available on SGX?
CME’s plans to offer the Nifty futures contract will generate additional global interest in the contract and create arbitrage opportunities between the two contracts to the benefit of all investors, both onshore and offshore, and potentially create increased liquidity in the underlying contract. It is also worth noting that SGX and CME have enjoyed a 25-year relationship involving similar contracts — an example being the mutual offset agreement for the Nikkei 225 index futures.
There have been reports that SGX is planning to introduce trading in ADRs (American depository reeipts).
Today, we have a comprehensive suite of securities and derivatives products for our international investors. More choices can be expected in due course, as we explore other asset classes such as Asian equity derivatives and fixed income. We have seen increasing customer interest in ADRs. There will be an official announcement on ADRs as and when they are rolled out.
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Commodities have become a thrust area for exchanges globally. How does SGX plan to position itself in the commodity space?
Sicom, a subsidiary of SGX, was acquired in July 2008. It brings to the marketplace a strong foundation as a commodity exchange with strong growth potential. Positioned as a multi-product commodity exchange, Sicom plans to introduce new products in agriculture, precious and base metals. Its vision is to be the price discovery centre for commodities produced, consumed and traded in Asia. This will drive costs down; it will also position Singapore as a commodity trading hub. If you look at the market statistics ending March 2010, trading in Sicom rose 54 per cent to 36,701 contracts year-on-year, signaling the increasing interest in commodities.
In the commodity space, SGX has an alliance with India’s National Commodity & Derivatives Exchange (NCDEX). How is it beneficial for the two exchanges?
In May 2009, Sicom collaborated with NCDEX to boost commodities markets in Singapore and India. The collaboration will enable designated products to be traded and cleared in both exchanges. In addition, NCDEX will make available its agricultural commodity index to Sicom to create derivative products. This will make Sicom the first exchange outside India to trade NCDEX’s products and NCDEX the first exchange outside Singapore to trade Sicom’s products. The exchanges will designate new products to the co-operation in response to market demand and jointly market and promote these products. By doing so, Sicom and NCDEX provide participants convenient trading access to both exchanges. Interestingly, Sicom will start trading its Robusta Coffee contract on April 22, 2010.
