Handing over a more diversified SGX

Mr Magnus Bocker will leave his post as SGX chief on July 14, but the Swede plans to stay put in Singapore.
Mr Magnus Bocker will leave his post as SGX chief on July 14, but the Swede plans to stay put in Singapore.ST PHOTO: MIKE LEE FOR THE STRAITS TIMES

Outgoing CEO's changes have drawn praise, and brickbats too

MR MAGNUS Bocker was brought in to make big changes to the Singapore Exchange (SGX), and 5½ years later, he feels confident that he has largely fulfilled this brief as he prepares to hand over the reins to successor Loh Boon Chye, a former investment banker.

The Swede, who came to SGX after overseeing the major integration of a number of Nordic exchanges in northern Europe with Nasdaq, has faced some criticism along the way.

Technical glitches under his watch, which halted trading in November and December last year, have drawn a reprimand from the Monetary Authority of Singapore.

  • CAREER HIGHLIGHTS

  • 1961: Born in Skollersta, Sweden
    1983-1986: Studied business administration and finance at University of Stockholm
    1986: Joined exchange company OMX
    1996: Became president of OM Technology
    2003: Became CEO and president of OMX
    2008: Became president of Nasdaq OMX
    2009: Joined SGX as CEO till 2015

But he has taken steps to rectify these problems and has left no stone unturned in his quest to turn the local bourse operator into a world-beater.

For instance, he has installed a state-of-the-art trading engine - reputedly the world's fastest - and has introduced the China A50 contract, which has made SGX the world's biggest futures market for Chinese securities.

With steps such as these, Mr Bocker, 54, has transformed SGX into a much more diversified business, by building up its derivatives business and reducing its reliance on what used to be its biggest revenue contributor - fees from clearing securities trades

"When I accepted the post, (then SGX chairman) J.Y. Pillay told me that I must have a thick skin to get the job done," Mr Bocker recounted in a farewell interview with The Straits Times.

Early in his tenure, he tried to pull off a game-changer by offering to pay A$8.4 billion (S$11 billion) for the ASX, which runs the Australian stock exchange.

But that idea had to be dropped following vehement opposition from Canberra when the proposal become caught up in debate over nationalism.

He said: "That merger would have resulted in a big difference in size. We saw a lot of benefits financially and strategically. But did we spend a lot of time thinking about what might have happened? No. You pursue options. If it doesn't work out, you move on."

Indeed, the focus has now changed from mergers and acquisitions to connecting with other bourses. The success is best reflected in SGX's derivatives business, which now enjoys a roaring trade in regional securities.

Mr Bocker said: "We are the best connected market in Asia. It is like Orchard Road. If you have a lot of shops, you will find a lot of people going there.

"We have a very strong link with Japan in our Nikkei-225 contract. From there, we added the Niffy-50 from India, the MSCI Taiwan and the China A50 contract. That gives our members many markets they can trade in."

On the securities side, however, he conceded that SGX should be a lot more connected but he is confident the changes he has implemented will soon make such connectivity a reality.

"For large bourses, connecting to Singapore is probably not high on their list. But if we are already connected to a number of medium-sized markets, the larger markets will be much more interested to come to us."

This explains his efforts to establish a linkage with Taiwan - due to go live next year - and to grow SGX's footprint internationally by establishing offices in financial centres such as London, Hong Kong and Mumbai.

And reflecting the growing importance of China to the SGX, he stationed Mr Lawrence Wong, SGX's listing head, there.

Mr Bocker also allayed concerns that Hong Kong's bourse had pulled way ahead of Singapore's in that it has been able to pull off coups such as connecting with Shanghai.

He said: "To define success, it does not mean that just because someone is doing better, you are not doing good. The Shanghai-Hong Kong connect is a political decision."

The success mainland China has reaped by connecting its Shanghai bourse with Hong Kong, followed by another connection between Shenzhen and Hong Kong, will only increase the likelihood of making links with Singapore and other markets.

For SGX, the biggest priority is to achieve a top-notch quality market to attract market players here, with the overhauling of trading practices and tightening of the rule book to safeguard investors' interests.

Key changes have included the introduction of circuit breakers, which offer a trading respite if stock prices undergo sudden changes, attracting "liquidity providers" and cutting lot sizes from 1,000 shares to 100 shares to make blue chips more affordable to retail investors.

SGX also plans to do away with contra trading - the unique practice of giving an investor three days' grace to make payment on stock purchases - by introducing collateralised trading next year.

Investor education is another key priority. "Last year, we educated over 100,000 people. When I came, the number was around 5,000," he said.

And despite the two technical glitches, he is confident that SGX is very much on top of what it is doing where technology is concerned. He said: "As consumers, we want the information on our phones, on our laptops and we want to have it immediate. In order to do that, the technology becomes more complex than what it used to be. But it is not like the complexities are getting out of hand. We know exactly what we are up to."

However, scrapping the 90-minute lunch break is a move that still grates on some remisiers - the self-employed brokers who make a living from buying and selling shares on behalf of their clients - who want to turn the clock back on such changes.

But Mr Bocker is adamant that measures like this are necessary. He said: "We can't have one group of market participants deciding for all the others. We have to weigh everyone's interests for the benefit of the market. When you stop and start the market again, you create new risks."

While the overall daily stock market turnover has stayed flat at $1 billion to $1.2 billion between the start of his tenure in December 2009 and now, he is confident that SGX will have a bright future ahead following the changes which he has engineered.

Mr Bocker said: "We had been in a position to reposition the SGX for the better. Over the next three years, I am sure that we will have a market that will double in turnover. We will have a lot more new listings than what we have now."

Mr Loh, 51, who was until recently Bank of America-Merrill Lynch's deputy president and head of global markets for Asia-Pacific, takes up his new post on July 14.

As for Mr Bocker, he is staying put in Singapore. For now, he plans to take a break before looking to other challenges.

engyeow@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on June 27, 2015, with the headline 'Handing over a more diversified SGX'. Print Edition | Subscribe