Singapore Exchange Limited
SINGAPORE, 2013-01-08 10:32 CET (GLOBE NEWSWIRE) --
Singapore Exchange (SGX) today said it is well positioned to meet the latest
international regulatory and risk management standards set by the International
Organisation of Securities Commissions (IOSCO)1 and Committee on Payment and
Settlement Systems (CPSS)2. This has been achieved after an extensive review
and sharpening of SGX's risk management and operational processes, and the
addition of new rules and procedures to enhance the safety and efficiency of
'Recognising our robust regulatory framework and financial strength, customers
have increased the use of SGX's clearing services to manage their market
exposures. In meeting the latest global regulatory requirements, we assure our
customers that they can continue to efficiently expand their businesses and
confidently manage their risks via SGX. Our standing as the clearing house and
exchange of choice in Asia is further validated and made more secure,' said Mr
Magnus Bocker, CEO of SGX.
Over the past two years, IOSCO, the standard setting body of securities
regulators, has issued new standards on trading and clearing with the
objectives of protecting investors, ensuring that markets are fair, efficient
and transparent, and reducing systemic risk. Together, CPSS and IOSCO also
published the Principles for Financial Market Infrastructures (PFMI) in April
2012, which established the global regulatory standards for clearing, payment
SGX, which operates in line with current IOSCO standards, will by January 2013,
observe all the new3 CPSS-IOSCO PFMI Principles. SGX will be among the earliest
exchanges and clearing houses globally to meet these standards. Improvements
effected will include:
SGX has two clearing houses, namely, Singapore Exchange Derivatives Clearing
Limited (SGX-DC) that clears derivatives transactions and the Central
Depository Pte Limited (CDP) that clears securities transactions. Both clearing
houses have ample capital to meet their obligations as Central Counterparties
(CCPs). SGX has also internally deployed more capital to support their clearing
-- SGX-DC has net equity capital of S$246 million, of which S$150 million is
contributed to its Clearing Fund. With this capital in place, SGX-DC is in
a position to serve more over-the-counter (OTC) market participants seeking
to use clearing services, or other products, to mitigate risks and meet new
-- The CDP, which clears securities transactions, has net equity capital of
S$179 million of which S$60 million is contributed to its Clearing Fund.
SGX's two clearing houses will also seek stand-alone recognition from
regulators in several countries to support on-going and future activities.
In addition to capital adequacy, SGX will introduce securities margining in the
CDP effective 21 January 2013. This will strengthen the CDP's capacity to clear
more products including single stock options, fixed income securities and
multi-currency securities. Such robust margining practice is already in place
Increased Transparency and Market Enhancements
-- Transparency of SGX Clearing Houses
In line with the new standards, SGX will provide increased transparency on
matters relating to its risk management processes and systems to enable
participants to gain a greater understanding of their respective risk exposures
to the clearing houses.
SGX will also provide more information on its trading and clearing fees to
enable end-customers to understand better the cost of using trading and
-- Transparency of Market Activities
To further enhance transparency of market activities, SGX will from March 2013
enable tagging of securities orders which involve short selling. Daily reports
on the total value and volume of short sales for each counter will be
published. The tagging of short sell orders and disclosure of short selling
information will enable investors to make better-informed investment decisions.
-- Market Enhancements
Over the past year, SGX has introduced various enhancements in both the
securities and derivatives markets. SGX will also introduce mandatory pre-trade
risk controls for derivatives at the Exchange-level in the coming months. This
initiative will enable more effective risk management by SGX members.
Recognition by U.S. and European regulators to provide for global participants
SGX is seeking formal recognition from the U.S. Commodity Futures Trading
Commission (CFTC) for both its derivatives exchange (SGX-DT) and clearing house
(SGX-DC) to maintain continuity in its global derivatives activities. It will
also be seeking recognition from the European Securities and Markets Authority
(ESMA) in due course.
SGX-DC's application to be registered as a Derivatives Clearing Organisation
(DCO) in the U.S. is in progress and on course. In the meantime, CFTC has
granted SGX specific no-action relief to enable U.S. customers to continue
their current OTC clearing activities via SGX-DC till such time when the
registration is complete.
SGX as Asia's Pioneering Central Counterparty and Gateway
SGX's attractiveness as a centre for risk management is well-supported by its
strong capital base and its anchor in Singapore's AAA strength and financial
As Asia's pioneering Central Counterparty, SGX was the first to offer clearing
of Interest Rate Swaps (IRS) and Asian Foreign Exchange Forwards (NDF) in Asia.
In the futures market, overnight open market positions, or open interest, on
SGX hit a new record high of 2.95 million contracts on 13 December 2012. This
is 250% higher than the open interest a year earlier. In commodities, SGX
cleared more than 100 million tonnes of iron ore swaps in 2012. Over 90% of the
world's cleared iron ore swaps are cleared at SGX.
About Singapore Exchange (SGX)
Singapore Exchange (SGX) is the Asian Gateway, connecting investors in search
of Asian growth to corporate issuers in search of global capital. SGX
represents the premier access point for managing Asian capital and investment
exposure, and is Asia's most internationalised exchange with more than 40% of
companies listed on SGX originating outside of Singapore. SGX offers its
clients the world's biggest offshore market for Asian equity futures market,
centred on Asia's three largest economies - China, India and Japan.
In addition to offering a fully integrated value chain from trading and
clearing, to settlement and depository services, SGX is also Asia's pioneering
central clearing house. Headquartered in Asia's most globalised city, and
centred within the AAA strength and stability of Singapore's island nation, SGX
is a peerless Asian counterparty for the clearing of financial and commodity
For more information, please visit www.sgx.com
1 The IOSCO Objectives were announced in June 2010. Please refer to this link
for more details: http://www.iosco.org/news/pdf/IOSCONEWS188.pdf
2 CPSS-IOSCO Principles for Financial Market Infrastructures
3 The new standards (called 'principles') replace the three existing sets of
international standards set out in the Core principles for systemically
important payment systems (CPSS, 2001); the Recommendations for securities
settlement systems (CPSS-IOSCO, 2001); and the Recommendations for central
counterparties (CPSS-IOSCO, 2004). CPSS and IOSCO have strengthened and
harmonised these three sets of standards by raising minimum requirements,
providing more detailed guidance and broadening the scope of the standards to
cover new risk-management areas and new types of FMIs.
Tel: (65) 6236 8139
Tel: (65) 6236 8658
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