Singapore Exchange (SGX) will buy the remaining 80 per cent in BidFX from other investors for US$128 million (S$178 million) cash.

The move will expand its reach into the global foreign exchange over-the-counter (OTC) market when the deal is completed next month. BidFX - a cloud-based trading platform - was part of TradingScreen, which spun off BidFX in 2017. SGX acquired 20 per cent last year, planning to bring together FX futures with OTC markets.

It said yesterday that the synergies between itself and BidFX, coupled with the opportunity to support investors from pre-trade data to post-trade clearing, prompted it to buy the remaining stake.

Up to US$25 million may be paid to the sellers in 2022 if certain revenue targets are met by BidFX.

Since BidFX's establishment in January 2017, average daily volumes have grown at a compounded annual growth rate of 57 per cent to US$31 billion last month.

More than 100 of the world's largest banks, hedge funds and asset managers are connected to its platform.

The FX market is the largest financial market in the world.

Average daily turnover in the OTC market amounted to US$6.6 trillion by traded volume, BIS Triennial Central Bank noted last year, while the exchange-traded FX derivatives market is only about 2 per cent of the OTC one.

This presents major opportunities for SGX to build on its dominance in Asian FX futures to expand into a much larger global OTC FX market.

SGX chief executive Loh Boon Chye said the future of FX lies in the ability for market participants to benefit from price discovery, liquidity and transparency for both OTC and listed futures trading, in a single unified venue.

"BidFX is ahead of the curve in developing sophisticated electronic FX trading and workflow solutions. With BidFX as part of the SGX group, we can now serve a wider FX community with more comprehensive solutions and enhanced distribution capabilities, while bringing together the two growing and mutually reinforcing pools of liquidity," Mr Loh said.

TradingScreen chief executive Pierre Schroeder said TradingScreen clients will continue to have access to BidFX.

SGX's FX futures franchise has seen US$3.8 trillion in traded volumes since it started in November 2013.

Last year, SGX launched FlexC FX Futures, which allows market participants to trade customisable FX futures in an OTC manner and clear transactions on the SGX.

The combination of the SGX and BidFX's expertise, client and distribution network and products will scale up the successes of both firms and advance SGX's ambitions to offer end-to-end FX platform and solutions, the exchange said.

THE BUSINESS TIMES