Given the record growth in our industry, which regions and asset classes will lead in 2025 and beyond?
We are always bullish first and foremost on Asia, because it is home to not only the economic powerhouses of China, India and Japan, but also thematic stories such as artificial intelligence technologies in Taiwan and what we call the “hidden gems” of ASEAN – a region that’s almost half the size of the US with twice as many people. ASEAN’s potential is huge: collectively, the ten Southeast Asian countries are on course to become the world’s fourth-largest economy.
In terms of leading asset classes, SGX Group is trusted by global institutions as a multi-asset exchange, so I shall not play favourites! Investors know they can count on us for efficient access as well as round-the-clock liquidity, whether it is in equities, FX or commodities; our record derivatives volumes bear that out. Since our SIMEX days, through the highs of lows of the global economy, we’ve been delivering growth for market participants.
What do you see as the biggest risk to continued growth in trading volume?
In recent years, the world is seeing more policy-driven geoeconomic fragmentation, which can have far-reaching consequences affecting trade, investments and global cooperation in areas such as technology and climate. In the same vein, fragmentation of market structures and regulatory frameworks can also reduce liquidity and hinder capital efficiencies. While having more trading venues fosters innovation and different opportunities, it also makes the process of price discovery more complex.
Have regulators struck the appropriate balance between addressing risk and promoting innovation?
The idea of an “appropriate balance” is a complex and ongoing challenge for regulators, simply because risk and innovation are not constants. A good example is how technological advancements such as blockchain or AI can sometimes run ahead of regulatory developments. Our traditional regulatory approaches are designed for centralised authorities and transparency, whereas decentralisation is the fundamental value of blockchain technology.
To achieve a balance, market participants should continuously adapt and collaborate with regulators; global coordination among regulators can also help create a more harmonised approach. Ultimately, the goal is to build a regulatory environment that supports sustainable innovation while ensuring the best outcomes in terms of market stability and fair competition. Our goals are the same, so everyone in the ecosystem can play their part.
And thinking about innovation, which technology advances offer the most opportunity looking forward?
Exchanges have been at the forefront of technology – among the first markets to become fully scripless and electronic, to adopting emerging technologies. For one, cloud technology offers a lot of promise to our businesses. We have been progressively putting our footprint in the cloud, but we take a cautious approach on what we should put in cloud.
Of course, no conversation about innovation can exclude AI: in the past year, discussions on AI have overshadowed digital assets, and global business leaders are focusing on how to turn early demos into moneymakers. Whether generative AI can be harnessed effectively for use in regulatory activity is a challenge. This is especially given the need for regulatory decisions to be auditable and explainable. Our regulatory arm, SGX RegCo, has been applying AI to its real-time monitoring system to make surveillance and regulation of the securities market more targeted and effective.
What is the biggest challenge ahead for your exchange or for the industry as a whole?
For investors, geopolitical and macroeconomic uncertainties may be considered challenges, but from an exchange point of view, these are par for the course. We exist to enable participants to navigate the market’s complexities. When we talk about “Asia, Simplified,” that’s exactly what we mean – our raison d’être is to simplify the region’s dynamics and idiosyncratic risks for global investors.
What concerns me more is the gradual erosion of global trust. An increasingly deglobalised world, one defined by trade restrictions and economic nationalism, can disrupt the free flow of ideas and capital, and reduce efficiency gains all of us in the global community have worked hard to achieve over the years.
Trust is fundamental to the functioning of financial markets. As trust erodes, investors have less confidence in the ability of markets to make sense of uncertainty and form a price, which results in less stability and less growth. In the long run, that will impact every industry stakeholder.
Given the rapid pace of new products introduced in 2024, which three excite you most?
I am excited about the opportunities across our asset classes – commodities, currencies, equities and fixed income – that allow us and our customers to capture the future of capital markets. The convergence of products and platforms presents a unique opportunity to redefine what an exchange can achieve.
Our iron ore derivatives franchise has become Asia’s first global commodity. In January, our SGX Iron Ore 62% contract joined the Dow Jones Commodity Index, driven by its reputation as a global barometer of industrialisation. We aim to offer an integrated solution for clients to manage bulk cargo and freight risks on a single, capital-efficient platform.
In FX, we see rising interest in our FX futures from new market participants attracted to the deep liquidity and capital efficiency of our flagship Asian contracts. We will continue to prioritise connectivity and support to ensure over-the-counter foreign exchange participants benefit from our deep FX futures liquidity pool.
Finally, I’m excited about the steps we are taking to strengthen cross-border partnerships across the region as we aspire to create a more connected and accessible marketplace for investors.
What more can the industry do to improve diversity in financial markets?
Diversity is integral to financial markets and not only for reasons of better representation. When we bring a broader range of perspectives and ideas to the table, we can make more informed decisions, and that has implications for how far we can go in terms of innovation and growth.
Much effort has been made over the years to establish the direct benefits of diversity in business areas like strategy and risk management, and related advantages such as in recruitment and reputation. These are widely acknowledged and accepted. Diversity is progressing.
What is not yet so widespread are the practices that develop diversity into culture. The valuable intangibles like diversity do not just happen – leaders must take steps to encourage diversity throughout the organisation until the culture we have shaped tells us diversity has happened.
What was the most interesting film or play you saw in 2024? What was the best book you read in 2024?
To answer both questions: “Hidden Figures,” a 2016 non-fiction book by Margot Lee Shetterly and the film of the same name. The story narrates the incredible contributions of African-American women mathematicians at NASA during the US-Soviet space race of the 1960s. For me, one of the lessons is the importance of sometimes challenging long-held norms and beliefs to break barriers that can make a difference… indeed pave the way… for future generations.
This resonates with the work SGX Group does serving on the Council for Board Diversity, a Singapore government initiative to encourage listed companies and other public institutions to create value through board diversity. Gender diversity is one of the factors considered in environmental, social, and governance discussions, and we have already started to see some institutional investors vote against boards without sufficient diversity.
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