The Singapore Exchange (SGX) has reported a nine percent drop year-on-year (YoY) to S$149.7m in equity derivatives revenue in its H1 FY21 results ended on 31 December 2020.

The exchange’s adjusted net profit rose by seven percent to S$228m led by the growth of equities cash revenue. The equity derivatives segment, which accounted for 29% of the total revenue (S$521m), was generated from trading and clearing (S$110.6m) as well as treasury and others (S$39.1m).

Revenues and adjusted net profit were down five percent and 19% YoY mainly due to ‘a change in [the] mix of products and introductory fees for the new FTSE products suite’ and ‘lower treasury income which declined due to lower yield,’ respectively.

In contrast, SGX’s equities cash business climbed by 14% to S$201.1m YoY, representing 39% of the total revenue. Trading and clearing revenue were up 23% to S$111.5m YoY as the largest contributor while revenues from securities settlement and depository management increased by 12% to S$53.1m mainly due to ‘higher subsequent settlement activities’.

Average clearing fee for equities products was 2.77bps while that for other products, which included structured warrants and daily leverage certificates, was 0.99bps.

The exchange’s data, connectivity and indices (DCI) business, which constitutes the third revenue source, generated S$70.7m, up 35% YoY.

Market data and indices revenue advanced by 85% to S$39.6m YoY largely due to ‘the consolidation of revenues following the acquisition of Scientific Beta in January 2020.

In addition, SGX’s adjusted EBITDA increased by 7% to S$321m YoY while total expenses grew by 11% to S$248.3m driven by operating expenses, which were up 10% to S$199.3m on the back of higher staff costs and royalty expenses.

‘Heightened demand for China access and risk-management solutions, coupled with the early success of our expanded pan-Asia derivative product suite and higher trading activity in our stock market, led to stronger performance in our equities business,’ said Loh Boon Chye (pictured), chief executive officer of SGX.

SGX’s H1 2021 performance has also benefitted from the exchange’s daily leveraged certificates (DLCs) business which saw its turnover growing by 390% to SG$514m in November YoY on the back of 121 DLCs on single stocks and 19 DLCs on the MSCI Singapore Free, Hang Seng Index or Hang Seng China Enterprises Index marketed.

The exchange also reported that following the acquisition of BidFX in June 2020, its currencies and commodities derivatives revenues rose by 18% to $92.5m YoY - accounting for 18% of the total revenue -  driving FICC revenue to S$99.2m, up 17% YoY.

Approximately 77% of the derivatives revenue came from trading and clearing, which was up 36% YoY mainly due to ‘the consolidation of BidFX revenue’ - commodities futures volumes increased by five percent to 12 million contracts while currency futures volume decreased eight percent to 11.8 million contracts.

ESG futures

In a step to accelerate its ESG First sustainability agenda, SGX and FTSE Russell today co-launched a suite of ESG derivatives - SGX FTSE Emerging ESG Index Futures, SGX FTSE Emerging Asia ESG Index Futures, SGX FTSE Asia ex Japan ESG Index Futures and SGX FTSE Blossom Japan Index Futures.

Industry neutral re-weighting will be applied to the new derivative products of which three are USD-denominated and one JPY-denominated, so that the industry weights in each index match the underlying index universe.

The new suite of futures has been certified by the Commodity Futures Trading Commission, enabling market participants to trade them directly from the US.

Click here to view the SGX’s report.