Asean Exchanges is a collaboration of seven exchanges from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam that aims to promote the growth of the region’s capital market by driving cross-border collaboration, streamlining access, creating Asean-centric products and implementing targeted promotional initiatives. We talk to Nels Friets, head of securities, at the Singapore Exchange (SGX) about the efforts underway.
Asean Exchanges plans to collectively promote Asean as a highly investable asset class. How will this help Singapore?
The Asean trading link is now focused on electronically connecting the participating markets and facilitating cross-border order-trading seamlessly.
With participating exchanges promoting Asean as a highly investable asset class, all market participants, including investors and brokers, will benefit from the resultant increased liquidity.
Overall, the trading link will benefit investors across markets, including Singapore, as it provides an open and convenient single point of access through brokers into the various markets and will bring liquidity into capital markets across Asean, thereby creating greater buzz in the region.
My understanding is that the first stage will see the connectivity of SGX and Bursa Malaysia in June 2012 and the Stock Exchange of Thailand added in August 2012 after its new trading engine goes live. Is that still the plan and what’s the timetable for the other exchanges?
Yes, that is still the plan. The participation dates of the other Asean Exchanges collaboration members, namely, Hanoi Stock Exchange, Ho Chi Minh Stock Exchange, Indonesia Stock Exchange and The Philippines Stock Exchange will be announced at a future date.
If the creation of a common securities market is successful, would the next step be to create a common Asean currency?
It is not appropriate for us to comment.
The SGX attempted a merger with the Australian Securities Exchange (ASX) that didn’t happen, but was there an upside to the experience?
The ASX bid was the most successful unsuccessful deal that we know of. It put SGX on the map, it made people sit up and take notice of us and it opened many new doors. Among the new doors that opened for us include our recent partnerships with European derivatives exchange Eurex, new hubs in Chicago and London, and a tie-up with NYSE Technologies.
You launched a faster trading platform in August last year. What other moves have you made to keep Singapore at the cutting edge?
In addition to launching our new Reach trading engine in August last year, we have also rolled out enhancements to our infrastructure and market microstructure to further improve the market for all participants.
For example, we reduced minimum bid sizes in July, thus lowering trading costs for investors. And on August 1 we introduced continuous all-day trading, which helps both retail and institutional investors to trade through lunch to manage risk when afternoon trading sessions in Japan, China and Hong Kong are taking turns to open.
In March this year, SGX introduced dual-currency trading, enabling listed securities to be traded in two different currencies. It can also apply to other listed securities such as exchange-traded funds, benefiting investors who can now choose to trade in their preferred currencies while companies and issuers can enjoy the flexibility and potential added liquidity of having its securities trading in two currencies.
In the same month, SGX, together with MAS, joined Malaysia and Thailand to expedite the review process for secondary listings within Asean. We expect this will allow listed companies to leverage on Asean’s growth potential and that our customers will have access to a wider choice of investment opportunities.
And as part of the Asean Exchanges collaboration, SGX and Bursa Malaysia will be the first two exchanges to link up via the Asean trading link in June 2012. The Stock Exchange of Thailand will join the trading link in August. The three bourses that will participate in the first stage of the Asean Trading Link represent approximately 70% of the market capitalisation of the seven-member collaboration, thus offering substantial investment opportunities for investors.
Stay tuned for our upcoming supplement to FinanceAsia on Asean Exchanges in September.
