Singapore Exchange (SGX): What it is, How it Works

What Is the Singapore Exchange (SGX)?

The (SGX) is a full-service equities, fixed income, derivatives, commodities, and foreign currency exchange. The exchange came into being as a result of a 1999 combination of three separate entities—the Stock Exchange of Singapore, the Singapore International Monetary Exchange, and the Securities Clearing and Computer Services Pte.

In 2000, the Singapore Exchange listed its shares for public investors and in 2008 it completed the acquisition of Singapore Commodity Exchange.

Understanding the Singapore Exchange

The Singapore Exchange (SGX) provides trading, clearing, settlement, custody, and market data services for thousands of securities. According to its 2021 annual report, it operates the largest stock market exchange in Southeast Asia; the total market capitalization of listed equities exceeded S$900 billion as of the end of June 2021, with a daily average trading value of S$1.35 billion.

Part of the exchange promotes new capital raisings through Catalist, a platform for emerging companies that seek equity financing to fund their fast growth. The Singapore Exchange also bills itself as "the world's most liquid" offshore market for equity index derivatives covering major Asian economies.

The exchange extends its global reach through an equity stake in the Bombay Stock Exchange (BSE) and a partnership with Nasdaq, Inc. There have also been serious discussions in the past with the Australian Securities Exchange (ASX) and the London Stock Exchange (LSE) regarding mergers. With the increasing globalization of electronic exchanges, the proactive management of the exchange continuously looks to expand its business via partnerships or cross-ownership.

Listings on the Singapore Exchange

Real estate, banks, shipping, and oil and gas companies dominate the mainboard listings (excluding Catalist) on the exchange in terms of numbers, though there is significant representation in the consumer staples and healthcare sectors. As of 2021, there was a total of 735 listed companies. DBS, Singtel, CapitalLandInvest, UOB, and YZJ Shipbldg SGD are among the top companies in terms of market capitalization.

In 2018, the SGX announced a partnership with Nasdaq, Deloitte, and the Monetary Authority of Singapore (MAS) to look at implementing blockchain technology to increase the efficiency and fidelity of tokenized assets. In a press release, the SGX's chairmen said, “This initiative will deploy blockchain technology to efficiently link up funds transfer and securities transfer, eliminating both buyers’ and sellers’ risk in the DvP process. This is a collaborative innovation bringing together multiple players to pursue real-world opportunities that will benefit the ecosystem.”

The SGX later teamed up with HSBC and Temasek, which culminated with the issuance of Asia’s first public syndicated digital bond for Olam International in August 2020.