Can We Expect More Growth From Singapore Exchange Limited?

Singapore Exchange Limited (SGX: S68) announced earlier today that it has penned a new business agreement with ICAP’s EBS BrokerTec, a leading electronic foreign exchange and fixed income outfit.

The legal handshake sees the two parties collaborating on the future launch of Singapore Exchange (SGX) listed foreign exchange (FX) block futures on EBS BrokerTec’s FX central limit order book (CLOB), EBS Market. Through the agreement, investors can gain access to an enhanced liquidity pool for trading in Asian Spot, NDF, and Futures instruments on the EBS Market.

The launch of SGX’s FX block futures on EBS Market is set for the second-quarter of 2016, assuming it gets the nod from regulators. Once launched, all the listed FX block futures can then be traded and cleared through SGX’s trade registration system, the Titan OTC.

According to SGX’s announcement, ”EBS BrokerTec’s direct connectivity into Titan OTC will provide customers with automated straight-through-processing for trades matched electronically on EBS Market and SGX’s central clearing will provide increased capital efficiency.”

As a start, SGX will be offering its FX block futures in INR (Indian rupee), KRW (South Korean won), CNH (renminbi), SGD (Singapore Dollar), and CNY (again, the renminbi).

Given that most of SGX’s revenue currently comes from its securities and index futures-related businesses, FX futures trading might be a new avenue of growth for the company. The company’s chief executive, Loh Boon Chye, appears upbeat about the new development. In SGX’s announcement, Loh commented:

“This collaboration is a sign of our commitment to innovate and grow the Asian currency futures market. It will also provide a mutually beneficial market for both our customers given the strength of EBS’ network and SGX’s risk management and clearing tools. We look forward to further collaboration with ICAP and EBS BrokerTec to develop new products and services that complement and grow the FX OTC and futures markets in Asia.”

This new partnership with EBS BrokerTec seems like good news for SGX. Investors might want to keep an eye on how the collaboration would benefit SGX in the future in terms of its revenue and bottom-line.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.