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SGX reorganises business model to strengthen its position as a multi-asset exchange

SINGAPORE – The recent revamp of the Singapore Exchange’s (SGX) capital markets division had been on the agenda for at least two years and was seen as vital if the bourse’s business model was to have a greater impact, noted a senior executive.

The move involved the debt capital market and corporate client coverage units being folded into the SGX’s equity capital markets division.

Mr Pol de Win, head of global sales and origination at the SGX Group, said the change will help the bourse better meet the needs of a more diverse base of clients, a step that “has been on our minds for a number of years”.

“Combining these three areas into one unit will allow us to be more deliberate in engaging clients and be more impactful as opposed to them having three conversations with different people from the various units,” he added.

The moves also involve a change of personnel.

SGX Group’s global head of equity capital markets Mohamed Nasser Ismail will leave the company at the end of October after 18 years. The merged capital markets unit will be jointly led by Mr Koh Jin Hoe, now executive director for global sales and origination, and Mr Matthew Song, head of corporate and institutional client coverage.

The reorganisation comes amid a lull in initial public offerings (IPO) and low stock market liquidity.

There were eight new equity listings in the financial year ended June 30, raising $37.6 million in proceeds, compared with 17 IPOs raising $1.9 billion the year before, according to SGX data.

Daily average traded value on the SGX declined 13.4 per cent over the period to $1.1 billion, while total traded value declined 14.1 per cent to $275.5 billion.

Mr de Win, when asked if merging the three units into one capital markets division implies expectations of lower listing and stock market activity, replied that the SGX expects more business in the equity capital markets from next year.

“With higher interest rates, firms will find it more expensive to finance themselves through debt, making the equity market more relevant,” he added.

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He noted that the SGX has had talks with a growing number of South-east Asian companies in the new economy – in areas such as technology, innovation, information and digitalisation – that are now mature and large enough to list.

“We see a clear sweet spot where (the) SGX should be the venue of choice for these companies to list.”

Still, the bourse’s derivatives business has grown faster than its capital markets division, from less than 10 per cent of total revenue to over 40 per cent in the past five years, prompting the firm to position itself as a multi-asset exchange.

Mr de Win said: “We can have more meaningful and relevant conversations with global clients when we can talk about markets across Asia and across a spectrum of products as opposed to just one or two products.”

He added that the SGX has been growing its sales coverage and appointing senior personnel overseas to strengthen its multi-asset offering.

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