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Singapore Exchange dives deeper into digital to stay competitive

Bourse trials new high-tech trading tool and mulls rule change amid IPO slump

SGX CEO Loh Boon Chye speaks to the Nikkei Asian Review on Jan. 17 in Singapore. (Photo by Ken Kobayashi)

SINGAPORE -- Singapore Exchange (SGX), Southeast Asia's biggest bourse, is forging partnerships with fintech companies to remain relevant in the age of blockchain, cryptocurrencies and other disruptive technologies, CEO Loh Boon Chye told the Nikkei Forum "Innovative Asia" in Singapore.

Among other initiatives, SGX is developing a marketplace platform so that companies can communicate more easily with investors and analysts, allowing them to better monitor sentiment and make more informed decisions. This should also give investors and analysts a better understanding of companies by allowing them to benchmark them against their peers and monitor industry performance. 

"We are advancing the mobility of financial capital across borders by investing and collaborating with the industry -- from equities to currencies to commodities," Loh said in his speech on Jan. 17. "We believe technology should complement, rather than merely disrupt." He also emphasized that bourses will continue to play a central role "whether or not blockchains, tokens or cryptocurrencies take over one day." 

Another of SGX's initiatives involves a partnership with fintech company M-DAQ to launch a multicurrency automated quotation prototype. The service allows investors to view, track and trade securities in various currencies within a single liquidity pool. In August SGX began inviting investors to try out the prototype and offer feedback.

SGX is also venturing into artificial intelligence and data science to enhance its fixed-income trading platform as it strives to be a more digital exchange. It now has a centralized machine-learning server to accelerate its AI and machine-learning capabilities.

In September last year, it led a $53 million growth equity financing round in Trumid, a U.S. startup that operates an electronic corporate bond trading platform. "Fixed income, which is one of SGX's strongest asset classes, is an area we are investing in as part of our multi-asset growth strategy," said Chew Sutat, head of equities and fixed income at SGX.

SGX will also announce its decision on quarterly reporting requirements this year. "We have done our consultation. We have finished with that," Loh told the Nikkei Asian Review. "We will be in a position in the months ahead in 2019 to announce our decision." 

The bourse has been reviewing its practices so as to better compete with other exchanges amid the current IPO slump. SGX began seeking feedback in January last year on whether to retain quarterly reporting, as market professionals and listed companies repeatedly voiced concerns about compliance costs, particularly at smaller companies. One of the suggested options was to raise the market value at which companies are required to report results each quarter to 150 million Singapore dollars ($110 million), from SG$75 million now.

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