Singapore Exchange (SGX) is expanding the operator’s reach beyond FX futures into the global FX over-the-counter (OTC) market by acquiring the remaining 80% stake in BidFX from its other shareholder(s) for a cash consideration of approximately US$128 million. SGX first acquired a 20% stake in BidFX in March 2019. The transaction to fully acquire BidFX is expected to be completed in July 2020.
The multi-asset exchange and FX derivatives marketplace expect the acquisition to accelerate momentum to establish SGX as a one-stop venue for international FX OTC and futures participants. The synergies between SGX and BidFX, coupled with the opportunity to support international FX participants from pre-trade data and analytics, trade execution to a post-trade clearing, propelled SGX to purchase the remaining stake.
BidFX is a leading cloud-based FX trading platform for institutional investors, which has seen record trading volumes in recent quarters. Since January 2017, average daily volumes have grown at a compounded annual growth rate (CAGR) of 57% to US$31 billion in May 2020. BidFX’s roster of clients includes more than 100 of the world’s largest banks, hedge funds, and asset managers currently connected to its platform.
Loh Boon Chye, Chief Executive Officer of SGX, 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.”
Jean-Philippe Malé, CEO of BidFX, commented: “We are delighted to join the SGX group of companies and combine forces with the largest FX futures marketplace in Asia. We will be, amongst other plans, expanding our coverage to include FX futures, which gives sophisticated investors a hedge to access the broader market across OTC and futures liquidity pools. As we continue to grow, we look forward to contributing to Singapore’s success as a central FX liquidity hub in Asia.”
A former subsidiary of TradingScreen, BidFX had its spin-off in 2017 and is now enabling its clients to trade across both OTC and futures FX markets, with the option to have bilateral counterparty or centrally cleared FX exposures, all in a single venue with an integrated workflow management system.
Pierre Schroeder, CEO of TradingScreen, said: “We’ve purposefully focused our efforts and resources on our best opportunities for growth, and this has led to exceptional results, such as the BidFX sale being announced today. TradingScreen clients will continue to have access to BidFX via its multi-asset TradeSmart application.”
The size of the exchange-traded FX derivatives market is only about 2% of the OTC market, with an average daily turnover amounting to US$6.6 trillion. SGX intends to build on its dominance in Asian FX futures to expand into a much larger global OTC FX market. SGX’s FX futures franchise amounts to US$3.8 trillion in traded volumes since it started in November 2013. Last year, SGX launched FlexC FX Futures, an innovative feature that allows market participants to trade customizable FX futures in an OTC manner and clear transactions on SGX.