SINGAPORE Exchange (SGX), Asia's second-largest listed stock exchange, said on Friday it was confident of remaining profitable this fiscal year despite the sharp drop in share prices and trading volume.

SGX's Chief Financial Officer Seck Wai Kwong told a meeting of shareholders that stable revenue sources, such as derivatives clearing fees, data sales and listing fees exceeded operating expenses.

'One third of our cost base is variable and a large part of it is bonuses,' CEO Hsieh Fu Hua told shareholders at the bourse's annual general meeting.

Mr Seck said of the $118 million in staff costs incurred during fiscal year 2007/2008, $50 million was paid out in bonuses and another $10 million comprised share-based payment expenses.

The bonus payments will only kick in when net profits exceed a pre-specified return on equity, he added.

SGX also said it will soon start searching for a new chief executive as Mr Hsieh will not his contract.

'We will start the search for a successor very soon. We cannot assume that he will continue for a fourth term,' SGX chairman J.Y. Pillay told shareholders.

Mr Hsieh, who has been SGX's chief executive since 2003, is due to step down next year barring an extension of his contract.

SGX ranks as the second-largest listed exchange in Asia behind the Hong Kong Exchanges & Clearing and ahead of the Australian Securities Exchange Ltd. -- REUTERS