Road Trip to IDX: SGX's Judge Touts Expansion In Emerging Market Currencies

Matt Judge, European Head of Sales for Singapore Exchange (SGX), helps power our road trip to the International Derivatives Expo (IDX) in London across the finish line. Matt touts SGX's continued effort to boost its emerging market currency offerings by sharing an update on the recent launch of Brazilian Real futures, in partnership with B3. Matt also highlights SGX's success with T+1 and outlines other initiatives aimed at providing clients with cross-border connectivity across various asset classes.

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Transcript

(Note: This transcript was created using AI. It has not been edited verbatim.)

Sean McMahon  0:08  
Hello everyone, and welcome to the Modern Money SmartPod. I'm your host, Sean McMahon, and we've come to that point of the week. This is the last recording coming to you from IDX, the International Derivatives Expo in London. It has been a marathon of a week, and to help me cross the finish line, I'm joined by Matt Judge, the head of Europe for Singapore Exchange. Matt, how you doing?

Matt Judge  0:34  
I'm good. Thanks, Sean, saving the best of last. I hope

Sean McMahon  0:37  
Absolutely, absolutely you're my closer. I like that. So let's have some fun here. I don't want to you know, we're the only thing standing between each other in the pub, sure. So let's get to it. Let's get to it for sure. How has IDX been treating you so far? 

Matt Judge  0:52  
Look, it's been great for us as SGX. You know, it started on Monday. We have been really rolling the carpet out for a number of our clients, making sure that we're connecting to the right clients at the right time. And I think you know for us, SGX group, where Asia is now, you know, it is the right time. Many of our clients across Europe are looking to access all of our products, across all of our asset classes, which for us, you know, it's something that's really important to us here in Europe. One of the things that we've been, you know, really focused on, certainly for the last three years, since I've been SGX group, is to really increasing and grow that t plus one session, and thankfully, certainly for the last 12 months, and we're coming to the end of our financial year, SGX is we've really seen that growth coming out of coming out of Asia, t plus one session has grown by 20% that's the highest has ever been. Now that 20 cent, 20% 25% that's coming out of our international clients. So you know, me and my colleagues are super happy with that. You know, we don't want to, you don't want to stand on our laurels and think that's it. We want to, we want to continue to grow that and make sure that we're we're making a real difference here in Europe, which I think we are. We're seeing more and more of the buy side community coming to to SGX group to to manage their risk and and use our products as a as a way of hedging their exposure across FX equities, commodities and in our fixed income products as well. So look, we're in a great spot at the moment. Obviously, there are a number of challenges that we we continue to look at and see where we can add value. And yeah, and it's been, it's been a very successful year so far.

Sean McMahon  2:31  
Well, as someone who's covered the you know, t plus one, I guess, from origination to a proposal to reality, kudos to you and your team. Thank you on getting that done and performing, you know, at the typical, you know, standards I'm used to hearing from SGX. Let's talk about what's going on this week. So what have you heard around here in the hallways at IDX that has, you know, either surprised you or something that's kind of, you know, maybe even confirmed something you're already thinking in the market? It's like, okay, I'm not the only one thinking that this is where the markets go.

Matt Judge  3:02  
Sure. So the we've had many meetings, one on ones. But also, you know, speaking to our clients in the halls, there's, there's a number of things, and depending on which clients you're speaking to, it will determine, you know, what their response are. But there is definitely a push for AI technology is really driving our clients decision making now about where they're trading. More so than not, it's becoming very apparent to us, certainly SGX, that margin efficiencies are kind of one of the main drivers for clients decision making about where they're trading. And for us, being the multi asset exchange we are, I think that puts us in a great spot, certainly for for anyone who's looking to go pan Asia. So that's something we've been, we've been, we've been listening to our clients on, you know, one of the areas that we've been super focused on, certainly for the last sort of 12 months, about how we can add value to our existing flagship products, right? So, you know, we've, we have a thriving FX business, as you know, we've, we've made some recent tick changes to our Taiwan dollar. We relaunched that only a couple of weeks ago, and we're seeing some great traction there. So, you know, our, I think our main, you know, the main thing we're hearing is listen to your clients, look at where they're having challenges, and see as an exchange where we can fix those problems for them.

Sean McMahon  4:27  
Yeah, it sounds like this is the perfect place, you know, to bring all those people together. Yeah, that's for sure. And speaking of people coming together, the last time we all got together as an industry was in Bucha a few months ago, yeah. And when I was down there, I connect with, you know, some of the team from SGX, and you just announced the launch of the Brazilian real That's right, yeah, back then, it was a thing that was gonna happen. Now it's reality. It is. It is. How is that going so far? 

Matt Judge  4:52  
So that's great, you know, we've, we're just coming out of the, you know, I think we've been traded first, sorry, ninth of June. Um. So it's just over a week. It's been live, uh, obviously, the discussions actually have been going on for several months before we got to the position we're at. Now, look, we're super excited about this. I think you know this partnership with with b3 is something where s checks are really known for partnerships, right? We've we have a partnership with the New Zealand exchange on our dairy. We have a partnership with NSE, with with the nifty, as you know, on gift. And this is, you know, this is just a natural progression about how SGX can become more global and reach more of our participants, from it from a global perspective. So, you know, this is, this is something. It's a natural inclusion into our FX franchise. So we, we're optimistic that we can really grow this business forward where it really fits into our into our model is providing Asian clients access to the Brazilian real in Asian time zones. We know from the from what we've seen is that liquidity can be fragmented and and the credit risk in the OTC market, you know, can often be challenging. And what we're trying to do there is, is fixed a problem, right? How can we provide liquidity and access to the broader markets within that Asian time zone, and certainly for us here in Europe as well, and provide them with a with an alternative and that fits, you know, seems across, you know, broader hedging strategies. So, you know, speaking to our funds and speaking to asset managers, etc, this really fits in with, with what are, you know, our strategies for Internet FX business.

Sean McMahon  6:34  
And now, if I'm not mistaken, this is Singapore exchanges first move into emerging market currencies outside of Asia. So tell me, Matt, is this a sign of more to come?

Matt Judge  6:46  
Yeah. I mean, for us, for sure, as I say, this is, this is the first week, hoping, of many where I think SGX are really strong, is, is in that em NDF marketplace, and we've really shown that. You know, we can really add value to our to our clients globally, the Brazilian real is something that we see as a marketplace for for our clients to hedge their exposure to Brazilian real. It's a really important region. There's huge amounts of commodities, commodities that are traded between China and Brazil, and one where we where we sit, we're in, we're in a perfect position for that, right? And with, along with all of our other FX products, cnh, INR, Korean Wong, that's that's just taken a huge step forward in the last few months, where we've seen trading of, you know, over 40,000 a day now. So Brazilian, real really fits into our strategy that becoming SGX from an EM perspective. So the feedback we're getting from our institutional clients is very encouraging. You know, the global macro funds, asset managers and the corporates alike see strong value in the ability to hedge Brazilian real exposure in a more efficient particularly during the Asian hours, when the offshore market is limited with the liquidity. So you know, there's an interest from firms running multiple currency strategies, who are now optimizing collateral and margin usage through this integrated platform. So for us, we want to be seen as the the exchange where you can trade all em currencies on one platform in a cleared environment. As you know, SGX is a triple A rated for for clearing. So we really, you know, we really sit on the top floor now, in regards to clients looking to trade any currencies through SGX group.

Sean McMahon  8:32  
That definitely sounds like a, you know, a great position for SGX to be in, in terms of, like, you know, the one stop shop for emerging market currencies. But tell me what else is in the pipeline? What's next from SGX? 

Matt Judge  8:44  
That's a very good question. As you know, SGX are always looking for opportunities and ways that we can work with our clients. I would say the first is certainly we continue to expand our multi asset ecosystem, which has been at the core of our strategy. We, you know, we demand from institutional investors that we integrate access to our equities, FX, fixed income and commodities. You know our, you know, our goal is to provide a seamless platform where global investors can manage their risk across all of our asset classes. So this will include increasing it will growing our derivative suite deep in liquidity in our flagship products, you know, that's going from strength to strength, and then introducing new contracts which we've which, as you know, which we've done with the Brazilian real and others. And then secondly, our cross border connectivity, internalization, you know, we we're always looking at ways in which we can connect all of our clients to to as many Asian institutions they can. You say, we've, we've had those partnerships with New Zealand and others NSE, as you know, into gift. But I don't think we're going to stop there. I think we're going to look at ways in which we can bring Asian together, which would then provide access to our global. Markets. And then one really big area that we're looking at is to, you know, look at ways in which we can digitalize our infrastructure and innovation as well. So increasing the investment in advance in our data services and our data centers, electronic trading solutions, entering digital workflows. That's something we've been working with. As you may know, one of us is really bit FX and Max trader. That's really part of our family now. And you know, we're going to be working in ways in which we can bring our clients closer to those, to those platforms as well, and really add value across across all the markets. Well,

Sean McMahon  10:35  
Well, it certainly sounds like you and the team at SGX have a lot on your plate. And I'm not surprised, because every time I talk to anyone from from SGX, there's always just loads of innovation on the way. There is, there is. So listen Matt again. I know it's been a long, busy week here, and I appreciate you stopping by. You know, as we wrap things up here at IDX?

Matt Judge  10:54  
It's been great. So thank you very much. I'm gonna go for we'll have a quick drink for now.

Sean McMahon  10:59  
All right, to our listeners, thank you very much for listening all this week to all these podcast episodes featuring insights from some of the leading minds in financial services, all gathered this week in London at the International Derivatives Expo hosted by the Futures Industry Association.