7 min read

Thinking on a Longer Timescale at SGX 

Thinking on a Longer Timescale at SGX

Big trends are digitalization, especially post-trade, as well as connectivity.

Lee Beng Hong, head of fixed income, currencies and commodities (FICC) at SGX Group joined the Singapore exchange group in 2019 from Deutsche Bank and has got used to thinking on a much longer-term basis. 

He explains that bankers have an advisory role and focus on solving specific problems and providing bespoke and differentiated solutions to certain sub-segments of clients. However, a market infrastructure provider has to serve the broader community, transact with different parts of the financial ecosystem and think on a different timescale of the next five, 10 or 15 years.

Lee Beng Hong, SGX

Lee told Markets Media: “What are the things that we need to prepare for a better tomorrow and how to work with like-minded partners to try to execute that plan? To me, that is very interesting and meaningful work. It’s clearly hard work because the future is always uncertain but that is the challenge and the opportunity.”

SGX’s process is to engage the community to find their biggest pain point and partner with like-minded people to improve financial services with the vision of providing a multi-asset class infrastructure by taking a step-wise approach and slowly bringing in different parts of the ecosystem.

“The big trend is digitalization, especially around post-trade, and more interconnectivity,” Lee added. 

He continued that Asia is a very interesting region with young populations who will drive GDP growth. Singapore is a key trading center in the region and therefore SGX has a full suite of products that provide price transparency and hedging through indices, benchmarks and futures across all forms of global international transport. 

SGX was also the first to develop a leading suite of pan-Asia equity access products for clients who want to trade Japan, China, India or other countries in the region according to Lee. In addition, SGX also provides access for deploying capital around the region in commodities that are important for Asian growth, such as steel, or electric vehicles via EV metals, cobalt and lithium.

In 2022 SGX signed an agreement with China Central Depository & Clearing to jointly support the listing of  “Pearl Bonds”, which are Shanghai free trade zone bonds from Chinese issuers. Together with  a Singapore-based fintech Covalent Capital, SGX is launching a platform to give global investors seamless access to primary bond market auctions in China.

“Our focus is thinking about growth in Asia,” said Lee. “We want to continue to serve the broader global economy and the community with everything they need for risk management in this very interesting region.”


Last year the Monetary Authority of Singapore launched the Financial Services Industry Transformation Map 2025, laying out strategies for the country to further develop its position as an international financial center in Asia.

Lee said in a keynote speech in February at the ICMA Asia Pacific Primary Market Seminar And Forum in February this year that SGX could help achieve this by harnessing next-generation technology to advance Asia’s capital markets infrastructure through a mix of direct investments, joint ventures, and in-house innovation.

“Adoption of a fully digitalized infrastructure requires a convergence of three important criteria – digital asset or a credible, trusted process for asset creation and the infrastructure to transfer ownership; digital cash or a very efficient way to transfer cash as settlement is mostly in fiat currency; and also a secure wallet,” he added. 

He continued there has been a lot of discussion over the last few years around tokenizing traditional assets so that transactions become delivery versus payment (DvP) and real time.

SGX has looked at different applications of technology for a number of years and has already been digitizing trading workflows for almost two decades with a digital record of ownership and matching engine. Lee said: “To some extent we were fintech before fintech became what it is today.”

He believes there is an opportunity for an exchange to take a page out of the e-commerce or manufacturing industries as the industrial revolution 4.0 enables smart manufacturing by digitizing every part of industrial processes. Finance needs better standardization of digitizing assets and to ensure that it captures financial rights and obligations, and efficiently services assets, across their lifecycle.

SGX’s deepest belief is that the cornerstone of financial services is around legal enforceability.

“You can apply any technology but if legal enforceability is impossible, then you are wasting your time,” added Lee. “Regulatory and legal enforceability together with an efficient, trusted, robust technology is the holy grail.”

Therefore SGX takes an asset class by asset class approach to tokenization.


Improving efficiency

SGX also focuses on digitizing areas of the market where it can make the most near-term impact, for example, where settlement is above T+1 or 2, or longer than the typical fiat settlement cycle. 

Last year SGX CDP launched its distributed ledger technology enabled direct-to-depository solution, enabling commercial paper issuers to lower their settlement time by from five to two days, with the full elimination of paper trail. In Asia it can also take about a week to invest in a fund, and two weeks to invest in structured notes. 

“Losing that time value of money is a massive friction to the market, so we have focused on two asset classes – structured notes and fixed income,” said Lee. 

Last year SGX announced the formation of Fundnode with key partners to eliminate manual processing, facilitate reconciliation of flows and centralize processing and will take a phased approach towards a fully digitalized fund market infrastructure. 

“We have more users that are connected or close to coming onto that service, and we hope to go live in stages from the next quarter onwards,” added Lee. 

The same infrastructure for a structured note, which is an e-MTN programme with embedded options, can be used for a bond according to Lee.

In September 2020 SGX worked with HSBC Singapore and Temasek, the investment fund owned by the government of Singapore, to complete a pilot digital bond for Olam International. Following the collaboration on the bond, SGX and Temasek also launched a joint venture, MarketNode, in February 2021 to advance SGX’s vision of commercializing blockchain distributed ledger technology in financial markets.

Marketnode has formed a partnership with fintech NowCM to collaborate on the digitalization of APAC primary debt markets through a joint offering via Marketnode Gateway, an issuer services platform. A streamlined, automated process will remove several manual processes and improve efficiency for bond issuers.


There is a massive trend of financial institutions adopting electronification and wanting a modern technology stack that operates end-to-end. Lee said SGX FX can provide the full set of digitalization solutions serving FX on dealing floor and sales. Firms can automate price-making and risk management and also digitalize the client-interaction process, which was traditionally only provided by Tier 1 banks.

“There is a big piece of electronification around the second tier of massive regional and local banks,” said Lee.

The FX market trades $7.5 trillion on a daily basis with efficient price discovery despite not having a centralized marketplace. As a result, Lee explained that the same FX technology can be used in crypto for price discovery, and for any tokenized asset.

SGX has been experimenting with the application of cloud for many years and its most recent application is looking at how it delivers technologies to clients. In the FX unit SGX works with cloud providers to provide those applications out of an edge service. Edge computing moves data storage, processing, and analysis closer to endpoints where data is generated to deliver near-real-time responsiveness for high-performance applications.

Lee explained that SGX selects data centers close to its matching center to enable a very low-latency connection between the edge service and the client’s computer, and then creates a very lightweight version of the access interface. 

“The implementation is a cloud hybrid while providing low-latency matching,” he added. 

“Some of the work we are doing is at the next stage of exploration of how to provide low-latency markets that are accessible but create the best efficiency for our clients.”

In FX Singapore is the global number three behind London and New York according to Lee. He argued that Singapore is well-placed as FX as a consequence of economic activity. South and SouthEast Asia has 2.5 billion people that will generate economic development, a growing middle class and more capital markets trading. In addition, SGX is one of the few providers in the world that has a full suite of FX capabilities across workflow, OTC FX and FX futures according to Lee. 

“The exciting opportunity in FX is that after many years, we finally have a more normalised interest rate policy,” he said. “The process of electronification and improved connectivity across market participants is also likely to increase transaction volumes.”


An SGX joint venture, Climate Impact X (CIX), has launched its spot trading platform, CIX Exchange. The venture was formed in partnership with DBS, the Asian financial services group headquartered in Singapore, Standard Chartered and Temasek.


CIX said that by close of trading on 7 June, the first day of trading, bids and offers had converged to just a few cents and seven transactions totalling 12,000 tonnes of carbon credits had traded and cleared on CIX’s first standardized contract, CIX Nature X. The platform said it has introduced the first daily on-exchange liquidity window in the voluntary carbon market with firm bids and offers. This dedicated 30-minute pricing session pools all-day liquidity from Asia, Europe and Middle East to help sharpen benchmark prices and improve order depth for spot nature-based credits.

Lee said: “CIX is a very exciting development because we are trying to pool resources to develop a platform for clients who are coming to the region, and want to think about the best way to offset emissions by buying carbon offsets.”

However, he highlighted that one challenge for corporates in the region is the lack of regulated emissions trading schemes (ETS) such as in the UK and the European Union. In these schemes governments set a cap on the maximum level of emissions and create permits, or allowances. Each unit of emissions allowed under the cap can then be traded. Therefore, SGX believes identifying legitimate projects with CIX’s expert panelists will make an impact.

On 6 July The Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation launched a public consultation on requiring listed issuers to report climate-related disclosures  from financial year 2025 aligned with the International Sustainability Standards Board (ISSB). SGX had already mandated climate reporting aligned with the Task Force on Climate-related Financial Disclosures (TCFD) and created two ESG databases for equities and green notes for fixed income.


Lee said at the ICMA Asia Pacific Primary Market Seminar And Forum that SGX hosts more than 50% of APAC G3 currency green, social, sustainability and sustainability-linked (GSSS) bonds, making it the leading venue for such bond listings. In December last year SGX launched the Sustainable Fixed Income initiative, providing  enhanced visibility to investors of SGX-listed bonds that meet established standards for GSSS fixed income securities.

Through Marketnode SGX has also launched Greennode and Greennode China, a database of Asian issuers frameworks, allocation and impact data.

“The whole of SGX is a shade of green in everything we do in order to facilitate the energy transition,” Lee added. 



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