The Singapore Exchange (SGX) is attempting to secure a larger slice of secondary trading of foreign-currency bonds from Asian issuers in order to increase its revenues amid a multi-year slump in initial public offerings.
Finance Magnates recently reported that SGX’s revenue grew 3 percent to S$205.8 million ($149 million) in the quarter to 31 March while earnings rose 1 percent to S$89 million. Nonetheless, figures released by Bloomberg revealed that companies that listed last year in Singapore raised $366 million, the lowest amount since 2001.
Tsai Li Renn, head of fixed-income trading at SGX, said: “The bourse has been recruiting more participants to its bond trading venue since its launch in December. The Asian bond market will continue to grow because of the underlying investor demand and we look at the market infrastructure to support that growth. We believe we can reconnect the fragmented liquidity fields, especially post-the global financial crisis.”
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There are about $10.8 trillion worth of notes outstanding denominated in the U.S. dollar, euro and yen issued by companies and governments in the Asia-Pacific region.
Attempts to broaden its revenue base are amongst the most imperative challenges for the exchange after it conceded its spot as the top destination for IPOs in South East Asia.
To this end, the exchange has recently launched index services, offered more commodity and currency derivatives and widened access for corporate bonds to retail investors. Future plans include allocating additional resources to access more trades in Asian notes during European and U.S. time zones.
SGX said that this is part of a long-term plan to develop fixed income as another asset class that can contribute to the revenue and bottom line, adding that it would be “more patient than anything else in developing this market”.