Singapore Exchange (SGX) is further extending its reach into the foreign-exchange (FX) over-the-counter (OTC) space. Asia’s most international multi-asset exchange and largest FX derivatives marketplace announced the purchase of FX trading platform MaxxTrader, a leading provider of FX pricing and risk solutions for sell-side institutions including banks and broker-dealers, as well as a multi-dealer platform for hedge funds, for a cash consideration of approximately US$125 million.
Headquartered in Singapore and incorporated in 2008, MaxxTrader has built a strong, global client and dealer franchise with over 100 global banks, regional banks, broker-dealers and hedge funds currently connected to its platform. Its average daily volume (ADV) has also grown during this time to over US$17 billion.
MaxxTrader’s strong sell-side client base complements the buy-side clientele of BidFX, a leading cloud-based provider of electronic FX trading solutions which SGX acquired last year. Together, these acquisitions form part of SGX’s multi-phase strategy in building an integrated Asian FX marketplace for global investors.
SGX also acquired a 93 per cent stake in index provider Scientific Beta for €186 million (S$27) in 2020. Set up by the EDHEC-Business School, the firm has set-ups in Boston, London, Nice, Singapore and Tokyo, aims to help investors understand and use advanced beta equity strategies.
Loh Boon Chye, Chief Executive Officer, SGX, said, “Since SGX expanded from FX futures to the global FX OTC market, we continue to cement our footprint in this fast-growing and sizeable US$6.6 trillion-a day global market. We are excited to acquire MaxxTrader, which further enhances our FX OTC offering and widens our customer base across the sell- and buy-side.”
“Our next step is to offer clients a full suite of FX futures and OTC solutions, by building a primary FX OTC marketplace anchored in Singapore. In turn, this would accelerate our vision to create fungible and convenient access for diverse, global customers to different pools of liquidity under one integrated platform on SGX, and build Asia’s largest one-stop venue for international FX OTC and futures participants,” concluded Mr. Loh.
As the SGX has been expanding its fixed income, currency and index businesses through acquisitions,
it saw its net income falling 6% from a year earlier to S$445 million ($329 million) in the year ended June 30. Total expenses increased 8% to S$525.2 million (S$486.9 million), largely due to the consolidation of expenses relating to Scientific Beta and BidFX, excluding which total expenses would have decreased 4% to S$457.8 million (S$474.6 million).
While the low interest rate environment will continue to impact SGX’s treasury income, Mr believes it will also spur demand for its multi-asset offerings as investors seek enhanced returns.
Of note, SGX has received long-term Aa2 rating, the highest assigned to any exchange group by Moody’s. The rating agency has highlighted that SGX’s strong profitability, combined with limited financial leverage, contributed to SGX’s high creditworthiness. It also took into account the systemic importance of SGX to Singapore’s financial sector, the strong credit fundamentals of SGX’s central counterparty clearinghouses and the overall robustness of SGX’s governance framework.