Singapore Exchange reports fiscal 2Q net profit up 9 percent on higher derivatives revenue

Signage at the SGX building on Shenton Way in Singapore; taken October 2018.Signage at the SGX building on Shenton Way in Singapore; taken October 2018.

Singapore Exchange reported on Thursday its fiscal second quarter net profit rose 9 percent on-year to S$96.5 million as an increase in derivatives revenue more than offset declines in the equities segment.

Revenue for the quarter ended 31 December was S$224.1 million, up 9 percent on-year, it said in a filing to SGX after the market close on Thursday.

Equities and fixed income revenue, which includes issuer services, securities trading and clearing and post-trade services, fell 12 percent on-year in the quarter to S$85.6 million, accounting for 38 percent of total revenue.

Securities daily average traded value (SDAV) fell 14 percent on-year to S$980 million in the quarter, as total traded value declined 12 percent on-year to S$62.7 billion, it said. Equities traded value fell 14 percent on-year tin the quarter to S$57.2 billion, SGX said.

But derivatives revenue rose 35 percent on-year to S$112.9 million, contributing 50 percent of total revenue in the quarter, the filing said.

Market data and connectivity revenue rose 6 percent on-year to S$25.7 million in the quarter, accounting for 11 percent of total revenue, it said.

In its outlook, SGX said the results showed strong momentum in derivatives, amid increased global demand for Asian risk-management products, with higher participation in equity and foreign-exchange contracts from customers in the U.S. and Europe, as well as increased activity in freight derivatives.

But the securities business performed in line with regional markets, dented by concerns over slowing global economic growth and weaker earnings, SGX said.

“Looking forward, we expect markets to be uncertain as trade tensions between U.S. and China linger, and major central banks review their monetary policies. SGX’s position as a premier Asian risk management venue offers investors the ability to manage their portfolio risks with capital efficiency,” SGX said in the statement. “In the coming months, we will strengthen our position by further expanding our derivatives product suite and grow our range of single stock DLCs,” or daily leverage certificates.

It declared a dividend of 7.5 Singapore cents a share for the period, up 50 percent from 5.0 Singapore cents in the year-ago period.


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