UPDATE 1-Singapore SGX to invest S$250 mln in new trading engine

* NASDAQ OMX providing technology for new SGX trading
engine

* To be rolled out in the first quarter of 2011

* Will raise annual expenses by S$12 million a year

SINGAPORE, June 3 (BestGrowthStock) – Singapore Exchange (SGXL.SI: )
said on Thursday it will invest S$250 million ($178.4 million)
in a new trading engine to lower costs for overseas customers
and encourage them to trade more regularly through the
exchange.

“This new initiative — Reach — will create the world’s
fastest trading engine with the lowest trading latency… and
seamlessly connect trading communities in global financial hubs
to Singapore,” SGX said in a statement.

The Reach system, which will be rolled out from the first
quarter of 2011, includes connections to data centres in New
York, Chicago, London and Tokyo to reduce transaction costs and
processing time for customers in these cities.

SGX’s new trading engine will use technology developed by
NASDAQ OMX (NDAQ.O: ) (.OMXC20: ), the previous employer of SGX
chief executive Magnus Bocker.

SGX said the new trading engine will increase annual
expenses by around S$12 million over the next five years, but
added it expects the higher cost “to be more than offset by the
potential revenues from the co-location services”.

About 40 percent of SGX’s broking members have already
agreed to co-locate their trading applications with the
Singapore bourse’s trading engines, said Gan Seow Ann, head of
markets at SGX.

SGX has been encouraging foreign listings and rolling out
new derivative contracts that offer investors exposure to other
Asian markets such as Japan, India and Taiwan to position
itself as an “Asian gateway” for investors.

The Singapore bourse operator, Asia’s second largest by
market capitalisation, also plans to launch trading of Asian
companies’ American Depositary Receipts (ADRs) to attract new
investors and boost trading volumes. [ID:nSGE6220DM]

SGX currently spends about S$12 million a quarter on system
maintenance and rental, which means its annual IT-related costs
will rise by about 25 percent with the introduction of the new
system.

The increase in IT expenses should, however, be manageable
for SGX, whose net profit rose 12 percent to S$240 million in
the first nine months of the current financial year ending June
2010.

Stock Investing

(Reporting by Harry Suhartono; Editing by Kevin Lim)

UPDATE 1-Singapore SGX to invest S$250 mln in new trading engine