Singapore Exchange - DBS Research 2020-06-29: Targeting A Larger OTC FX Market

SINGAPORE EXCHANGE LIMITED (SGX:S68) | SGinvestors.io SINGAPORE EXCHANGE LIMITED (SGX:S68)

Singapore Exchange - Targeting A Larger OTC FX Market

  • Singapore Exchange acquires remaining 80% stake in BidFX for US$128m.
  • Funded by debt; EPS accretive from FY2021.
  • Move towards integrated over-the-counter (OTC) FX and futures offering.
  • Synergies include leveraging on client distribution and technologies.



SGX Acquires remaining 80% stake in BidFX for US$128m.

  • Singapore Exchange (SGX:S68) will be acquiring the remaining 80% stake in BidFX, a cloud-based OTC FX trading platform for institutional investors, from Trading Screen and BidFX employees for US$128m, funded by debt. Singapore Exchange’s existing 20% stake in BidFX was acquired in March 2019.
  • According to Singapore Exchange, the transaction will be EPS accretive from FY2021 and will not have a material impact in FY2021. BidFX has an average daily volume CAGR of 57% (2019-2019) reaching > US$30bn in May 2020. As a result, between 2017 and 2019, BidFX’s revenue CAGR was > 60%, with positive EBITDA.


Move towards integrated OTC FX and futures offering.

  • Singapore Exchange has grown its FX futures business since November 2013, with US$3.8tr in traded volumes since then. With the acquisition, Singapore Exchange has its eyes on the bigger OTC currency trading market which grew 10% CAGR between 2001 to 2019, as exchange-traded currency futures volumes only represent 2% of the broader market (2019: US$6.6tr traded daily).
  • With the acquisition, Singapore Exchange hopes to bring together the mutually reinforcing pools of liquidity in OTC and Futures, where > 25% of BidFX’s average daily volume (ADV) is in Asian currencies.


Synergies include leveraging on client distribution and technologies.

  • As BidFX is a multi-dealer FX platform with > 100 institutional clients currently, and > 75 employees in Australia, Hong Kong, Italy, Singapore, UK and the US.
  • On top of potential synergies in Asian non-deliverable forwards (NDFs), G10 spot and swaps, Singapore Exchange is looking to leverage on common client distribution with joint sales efforts, as well as BidFX’s technologies and capabilities to offer end-to-end FX platform and solutions.


Maintain FULLY VALUED; SGX continues to build upon its multi-asset strategy.






Rui Wen LIM DBS Group Research | https://www.dbsvickers.com/ 2020-06-29
SGX Stock Analyst Report FULLY VALUED MAINTAIN FULLY VALUED 7.400 SAME 7.400



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