Singapore Exchange, the operator of the city-state’s securities and derivatives markets, will be able to process trades faster and attract more business as it rolls out services including a new derivatives clearing engine.

 

“These technological enhancements will offer significant improvements,” SGX Chief Executive Officer Magnus Bocker told a conference in Singapore today. “They also support our initiatives to attract the growing pool of algorithmic and high velocity traders, which have doubled in number from the last year.”

 

Bocker, previously president of Nasdaq OMX Group Inc., took over from Hsieh Fu Hua on Dec. 1 after pledging at a media briefing in July to attract more foreign listings to the exchange. SGX’s new clearing engine, dubbed SGXClear, will begin on Dec. 7 and comes as the company ramps up other initiatives including clearing of over-the-counter financial derivatives, Bocker said.

 

The company’s trading volumes slumped last year as the global financial crisis dragged economies, including Singapore’s, into recession. SGX’s first-quarter net income increased 11% to $94.1 million for the three months to Sept. 30 as trading volumes rebounded, and participation of algorithmic traders grew.

 

Speaking publicly for the first time in his new role, he said SGX had seen “some success in clearing OTC energy, freight and bulk commodity derivatives” and would look to expand this area in the future.

 

The exchange introduced iron ore swaps this year, with volumes jumping to a record last month, according to data released by the exchange today.

 

SGX will also start ‘Fuel Oil 380 CST Futures,’ a new commodities trading platform, in the first quarter of next year, while its subsidiary unit, Singapore Commodity Exchange, will expand products to include gold, coffee and the clearing of OTC rubber contracts, Bocker said.

 

A derivative is a financial instrument whose value is based on another security or benchmark. Examples include options, futures and interest-rate swaps, and investors use them to speculate on prices or offset risk.

 

Some are traded on a bilateral basis where counterparties negotiate their own buy and sell orders with no guarantees either will complete the trade. That’s prompted regulators around the world to demand more rules in place to minimize the trading risks involved.