Singapore Exchange Ltd

SGX:S68

Earnings Call Transcript 2020-Q2

[Lay Chew Chng, executive]

Hi. Good evening, everyone here and to those on the webcast. Thank you for taking the time to attend our second quarter FY '20 results briefing. I'll start off with our presentation on the financial performance for the quarter and then Boon Chye, our CEO, will then present a business update.

Let me begin with some of our key financial highlights. SGX delivered a good set of results in the second quarter. Our net profit came in at $99 million, an increase of 3% from the same quarter a year ago. Top line revenue increased 3% to $231 million. The past quarter saw an easing in investors' concerns surrounding the U.S.-China trade tensions and rising interest rates compared to a year ago. There was lower volatility in the underlying Asian equities markets. Investors' confidence in cash equity markets improved following signs of a trade war truce between U.S. and China.

Our equity derivatives volumes declined 18% to 41 million contracts compared to a year ago. However, our traded value on our cash equity business increased by 9%. Volumes of our currencies and commodities business also rose 8% to 10.7 million contracts. This was mainly due to higher activity in our currency derivative contracts.

Total expenses of $112 million was comparable to a year ago. We continue to be disciplined in managing our costs. Our earnings per share was $0.092 for the quarter, and the Board of Directors has declared an interim dividend of $0.075.

This next slide shows the quarterly trend for revenue, expenses, EBITDA and net profit. Compared to a very strong first quarter, we saw a 7% decline in revenue and a 13% decline in our net profit. However, this was the highest second quarter revenue and net profit in the last 5 years. Quarter-on-quarter, our FICC and Equities business registered 15% and 6% declines in revenues, respectively. This was due to a slowdown in market activity, arising from the lower volatility this quarter.

In the previous quarter, there was heightened activity from reductions in interest rates by the Federal Reserve and mounting trade tensions between the U.S. and China. The lower activity this quarter was also partly due to the October Golden Week in China and the year-end holidays. Total expenses declined 1% quarter-on-quarter. This was mainly due to a decline in royalty expenses in line with our lower derivative volumes.

This slide shows the half yearly trend for revenue, expenses, EBITDA and net profit over the past 3.5 years. You can see that the trend is a positive upward trend. It reflects the successful efforts in growing our business.

Revenue for the first half of this fiscal year increased 11% against a year ago. Total expenses increased by 5% and we achieved a positive 5% jaw ratio. Net profit increased 14% year-on-year to $213 million and was up 5% against the previous half.

This waterfall chart shows our quarterly revenue movement year-on-year. As mentioned earlier, top line revenue was up 3% to $231 million. Our FICC business recorded revenue of $39 million, up 20% from a year ago and accounted for 17% of total revenues compared to 15% a year ago. Revenue from trading and clearing increased by 23%, and we saw higher trading activity in both currency and commodity asset classes. Currency futures volume increased 13% while commodity futures volumes increased by 3%.

Treasury and other revenue associated with the FICC business rose 16% to $11 million. This was mainly due to an increase in the margin balances.

Our equities business earned revenues of $165 million. This was comparable to that a year ago, and it accounted for 72% of total revenue compared to 74% a year ago. Cash equities revenue rose 5%, just mainly due to higher trading and clearing revenue, where total traded value rose by 9% to $68 billion. Average clearing fee came in at 2.66 basis points comparable against last year. Our cash equities business accounts for 37% of total revenue.

The equity derivatives revenue declined by 5% to $79 million and is mainly due to lower trading and clearing revenue as volumes declined by 18%. We saw lower volumes in our China A50 or Nikkei 225 and our Nifty 50 index futures contracts in a low volatility environment. Our equity derivatives business accounted for 34% of total revenue.

Our average blended fee per contract for equity, currency and commodities was higher at $1.23 versus $1.06. This was mainly due to an increase in higher fee-paying customers and a change in mix of contracts.

Our Data, Connectivity & Indices business recorded revenues of $27 million an increase of 4%.

Total expenses was comparable at $112 million dollars, as I mentioned earlier. Our staff costs increased 9% to $51 million, and this was mainly due to higher fixed staff costs from an annual salary increment as well as an increase of -- in headcount of 14, we now have a total permanent headcount of 831 globally. Provisions for variable staff costs increased due to higher share plan expenses in the quarter and an accounting reversal for provisions in the previous quarter.

Technology expenses declined 14% to $17 million. However, this is due to the adoption of the new accounting standard on leases that took effect on July 1. I had mentioned it in my briefing in the first quarter. So as a result of these new accounting standards, rental expenses of $2 million for our data centers, which we previously recorded as technology expenses, are now recorded as depreciation expenses. Excluding the impact of this new accounting standard, technology expenses would have declined by 2% to $19 million.

Premises expenses also declined by $2 million, mainly due to the adoption of the same accounting standard. Rental expenses of $3 million for office premises that were recorded as premises expense also now are recorded as depreciation expense.

Professional fees declined by $3 million, mainly from lower consultancy and legal fees compared to a year ago. So depreciation and amortization expense increased by $7 million due to the adoption of the new accounting standard, excluding which, it actually increased by $2 million due to the depreciation of newly implemented systems, such as our new post-trade system.

Let's have a look at our first half numbers. So first half 2020 revenues, as I mentioned earlier, up 11% year-on-year. Our FICC business earned revenues of $85 million, it was an increase of 38% as commodity derivative volumes rose 37% and currency derivative volumes rose 26%.

Our equities business generated revenues of $341 million, an increase of 6%. Cash equities revenue increased 6% mainly due to a 4% increase in the traded -- in total traded value to $136 billion.

Equity derivatives revenue grew 7% due to higher treasury income, which was partly offset by a decline in equity derivative volumes.

The average blended fee per contract for the first half for equity, currency and commodity derivatives was higher at $1.18 compared to $1.05 a year ago. Our Data, Connectivity & Index business accounts for 11% of our total revenues and registered a 4% increase on a year-on-year basis. This slide is on our first half expenses. It shows that our first half expenses was up by 5%, and the reasons for the movements in most of the expense categories are the same as what I've mentioned for the quarter. So this is my usual last slide, it refers to -- shows our key indicators -- key financial indicators. And you can see that our operating profit, EBITDA margin and ROE are high at 52%, 61% and 41%, respectively. And as I mentioned earlier, the Board has declared an interim dividend of $0.07 -- $0.075 per share, unchanged from a year ago.

So I'll -- next I'll have Boon Chye come and speak.

[Boon Chye Loh, executive]

Very good evening, everyone. Thank you for being here to join our second quarter FY '20 results briefing. Mr. Chew Chng shared with you our results. To reiterate, we delivered the highest second quarter revenue and net profit after tax in the last 5 years this quarter. We saw a strong performance year-over-year in our fixed income, currency and commodity business. There was growth of client participation in certain segments. And they gained traction and we recorded single day records in our FX contracts.

Overnight session of T+1 volume for our CNH contracts recorded a high of 70,000 lots on 13th December, following the news of progress in the U.S.-China trade talks. The Indian rupee contracts also registered volume and open interest records in December.

In equities, this quarter was characterized by lower volatility in the equities market, mainly in the Chinese underlying markets. Investors' concern from the U.S.-China trade war and rising interest rates also eased from a year ago, which saw lower demand for derivative risk management solutions. However, the cash equity markets benefited from returning investor confidence from signs of a trade war truce between the U.S. and China.

In Data, Connectivity & Indices, revenue grew a steady 4% year-over-year. We've also announced after market close today our acquisition of Scientific Beta. I'll share more about that later in this presentation.

Let me now move on to our respective business lines. In fixed income, bond issuance in Asia has been buoyant this year, and SGX has also seen an increase in bond listings from this part of the world. The number of new bond listings and amount raised were up 3% and 7% year-over-year, respectively, highlighting our role as the preferred international bond listing venue in Asia. As the leading venue for 40% of listed G3 currency bonds in Asia, we're also the leading listing venue for sustainability bonds as the team of sustainable financing continue to gain momentum in the capital markets.

Earlier this month, the Monetary Authority of Singapore expanded and renamed the Asian Bond Grant Scheme to Global-Asia Bond Grant scheme, which provides funding support for issuers with an Asian angle or nexus to issue international bonds through Singapore. We expect the grant to be attractive to bond issuers and in tandem with demand for capital in Asia for infrastructure and sustainability projects. Interest in our fixed income products and services should continue to remain robust.

In FX, volumes increased by 13% year-over-year to 5.8 million contracts. Year-end aggregate open interest was up 90% year-over-year to close at USD 8 billion. In particular, trading interest from international participants grew as reflected by an increase in trading activity in non-Asian hours of the overnight session. Volume in the T+1 session was up 9% year-over-year and now contributes to approximately 30% of total currency volumes.

There were also single day volume and open interest records for the India rupee and the CNH contracts. The single day records for CNH followed news that a Phase I trade agreement was concluded in the U.S.-China trade discussions and demonstrate SGX role as the leading venue for Asian FX risk management.

You will recall that we made a strategic investment in BidFX earlier in 2019, and we look to offer our suite of listed Asian FX switches alongside the OTC products offered on the BidFX platform. We'll be launching this feature in the coming months.

Moving on to commodities. Iron ore volumes increased 5% year-over-year to 4.1 million contracts as supply concerns were elevated. With over 98% market share in the international market, SGX has established itself as a global benchmark for iron ore. We remain very focused on growing liquidity in our traded iron ore market through greater financialization as iron ore grows in appeal as a macroeconomic proxy. This initiatives include engaging with financial market participants to securing inclusion in commodity indices as well as providing more iron ore market-related content, including on our Titan OTC Pro vol.

Next, in equities and starting off with equity derivatives. Volumes were lower by 18% year-over-year. The quarter was characterized by lower vol in underlying equity markets, which saw lower demand for derivative risk management solutions. Volumes, however, remain resilient year-on-year in MSCI Taiwan, and Nifty, including our single stock futures. Volume in the T+1 session contributed 14% of the total equity derivatives volume. In the last quarter, we extended our trading hours to now cover the U.S. New York cash market closing hours at 22:30 hours, we're now the longest derivatives trading exchange in Asia. We also launched the world's first offshore futures on the Vietnam equity market, making our first foray into the frontier market. We'll continue to work with partners to provide efficient single point of access to Asia.

Listing revenue was $9 million comparable year-over-year. Total funds raised in the second quarter was $4.4 billion, an increase of almost 2x year-over-year. Secondary funds raised almost double to $3.7 billion in the quarter, demonstrating our attractiveness as a capital raising venue.

Total primary fundraising to date was $1.6 billion and on track to exceed all of financial year 2019.

The IPO pipeline remains healthy, with companies who delayed the IPO in the second quarter indicating that they would like to access the capital markets in the next 6 months. So the next 6 months of the calendar year, and we look forward to welcoming more listings in the coming months.

In cash equities trading and clearing, total traded value stood at slightly over $68 billion, up 9% year-over-year. As investors search for yield in today's low interest rate environment, picking the right sector is important. For example, our 43 REITs staple and property trust generated average total returns of 23% in 2019 and ended 2019 with an average 6% distribution yield. This sector now accounts for 24% of SDAV in 2019. We continue to expand the investment options available to investors in the second quarter, added the fourth batch of single stock daily leverage certificates, with 5x leverage on 1 Singapore and 5 Hong Kong large cap companies. That brings the total to date of 97 DLCs. We've also enhanced our securities borrowing and lending program with the introduction of competitive variable rates for over 450 securities to replace the fixed rate model.

In Data, Connectivity & Indices business, revenue grew a steady 4% year-over-year, and it came from growth of market data, about 3% and index revenue of 4%. And we also saw increase in the connectivity revenue.

So with that, let me now share more about our acquisition of Scientific Beta. Factor investing has seen significant growth in recent years with assets under using smart beta and factor-based strategies forecast to reach USD 2.7 trillion in 2020 this year. And there's further room for growth. You can see the forecast on the right-hand side of this slide.

The growth of passive investing is a trend that were mentioned in the previous briefing. As part of SGX new organizational setup at the start of our financial year 2020, we indicated that in line with the global shift towards passive investing, we're building our index business capabilities to cater for future growth.

There are many investment strategies, even within passive investing. Factor investing and smart beta is an area that will complement and scale up our existing index business. Smart beta is an investment strategy that uses a set of objective factors or criteria other than market capitalization. These factors are value, high momentum, low volatility, high profitability, low investment and size. This is driven by demand for transparent and low-cost investment solutions following the global financial crisis.

The relative underperformance of high-cost active funds have also spurred demand. Further advances in technology, combined with higher processing power, have led to new ways to harness data for investment decisions. Smart beta therefore combines the benefits of passive and active investing strategies.

Scientific Beta is an award-winning smart beta index firm, which develops, produces and promote multi- and single-factor indices. It is an attractive opportunity to broaden SGX index offering through the fast-growing smart beta index space. First, it complements SGX Index Edge thematic and custom index capabilities and provides access to a different set of key asset owners, managers and product issuers. Second, it has a strong track record with more than 10x increase in assets under replication since 2015, a recurring revenue base and minimum historical client attrition.

Post-acquisition, the strong management team will continue with Scientific Beta, and Scientific Beta will continue to collaborate closely with EDHEC business school. Third, there are exciting product innovation opportunities and linkages with SGX derivatives platform.

We expect this acquisition to offer 3 key areas of potential synergies for SGX. First, in broadening SGX Index offering. Scientific Beta adds deep factor investing, ESG and related R&D capabilities for proprietary index development to index each custom index calculation and index calculation services. Second, there are opportunities to create a wider suite of products for SGX multi-asset exchange by building upon SGX product capabilities and provide a more diverse range of products for our participants. Third, Scientific Beta brings its complementary client base of asset owners in the U.S. and Europe to SGX Index Edge client base of primary investment banks and asset managers, and we're very excited and look forward to growing our index business as a pillar of SGX revenue moving forward.

And with that, I conclude my presentation and invite my colleagues up on the stage to join me for the Q&A. Thank you for your attention.

[Nicholas Lord, analyst]

Yes. Can you hear me? Yes. I have 3 questions. First of all, just can you give us a little bit more detail on the acquisition you've announced today? So I guess my question is, first of all, what is what are you expecting your funding cost will be? I think you said you'd fund the acquisition through debt.

[Lay Chew Chng, executive]

Funding cost is the first question?

[Nicholas Lord, analyst]

Yes. Second is, you say that the acquisition should be EPS accretive in 2021. So I just wonder if you can give us some indication as to what the profit of this business will be? And how big you think it could become in relationship to your data business?

My second question is on cash flow. I noticed that you've had a release from the electricity clearing house. I just wonder if you can talk about that. It looks to be $14 million positive in the quarter. And for...

[Lay Chew Chng, executive]

What's the second? Cash flow?

[Dominic Lim, executive]

He said -- are you talking about the cash flow statements?

[Nicholas Lord, analyst]

Yes. Yes. And then finally, just wonder if you can talk a little bit about the expansion in security fees in the quarter, both standard product and nonstandard product?

[Boon Chye Loh, executive]

Okay. I'll take the first one on the funding costs. We will draw down external borrowing in euro. And as you know, euro interest rates are very low. And then we'll put forward a permanent funding structure, when we finalize that and look towards to optimize, clearly, the financing costs. For the FY 2020, which is only 6 months left, no material impact to the financials, and they'll be accretive from 2021.

I wouldn't share greater detail in the exact financial, but I'll say the following. It has a revenue at the end of last year of more than EUR 20 million, and it is profitable. If you look at our DCI business, it's been growing at 4%, 5% a year, and now it's over S$100 million. And we'll share that, obviously, more importantly, as we focus on operational efficiency because we could assist Scientific Beta with index calculation, and mostly reaching to their client base on our very own Index Edge. And assisting Scientific Beta to expand beyond a strong base in Europe and U.S. into Asia. And obviously, with our view, which is a trend that we're seeing, clearly, to passive investing, ability to then work together to launch new products to serve a greater client base. Cash flow?

[Lay Chew Chng, executive]

In terms of the cash flow, Nick, that's really our subsidiary, the Energy Market Company, and it really involves cash that we collect from our customers. And the fluctuations are really dependent upon the activity in the market. So there shouldn't be any alarm in terms of the variances on the year -- on a quarter-on-quarter basis. Yes. That's right, yes.

[Hsien-Min Syn, executive]

Can I just understand the third question?

[Nicholas Lord, analyst]

Definitely. It was on slide...

[Hsien-Min Syn, executive]

Was it about the cash market? The...

[Nicholas Lord, analyst]

It was Slide 20, Equities -- Cash Trading & Clearing. So you have the -- if you look at the average clearing fee by product, the equities product revenue, $2.68 million to $2.72 million right in the quarter. And then the other products went from 65 -- or 0.65 to 0.75. So I just wonder if you could talk through those movements.

[Hsien-Min Syn, executive]

So in the scheme of relatively flat SDAV but slightly different mix between, say, REITs and DLCs and indices, I think the biggest driver of the uplift in cash market yields is probably quite significant index changes. I think there's a specific one with a large REIT that was included in the index. And those transactions tend to happen at, say, the market on close or on off-market trades. And those tend to be high yielding for us. They tend not to be market maker trades for which you might actually have a slightly lower yield because they're delivered by market makers. So these are full fat real money trades that give us high return.

[Nicholas Lord, analyst]

And on the other products, the nonequity, is that DLC growth that's driving that?

[Unknown Executive]

DLCs primarily. Yes.

[Boon Chye Loh, executive]

Any questions from the webcast?

[Dominic Lim, executive]

There's a question from [indiscernible] from Saga Tree Capital. How will Scientific Beta differentiate itself from major index firms, such as MSCI and FTSE?

[Boon Chye Loh, executive]

The Scientific Beta was formed by the EDHEC-Risk Institute in 2012. And it has the very strong R&D pedigree background in developing indices. So clearly, the R&D focus is one differentiating factor. Two is transparent methodology, together with ability to explain the returns and customize according to asset owners' requirements on expectation of risk and return. It's clearly the second one. And third, their presence in Europe and expanding in the U.S. gives them that global footprint, a smaller footprint, clearly in Asia, which SGX will be able to assist Scientific Beta to reach out to some of the SGX client base.

[Lay Chew Chng, executive]

Any other question here?

[Jayden Vantarakis, analyst]

I'm Jayden from Macquarie. My first time joining. Thank you very much for the presentation. I have 2 questions. The first is, I saw there was a discussion on continue -- or the disclosure rules for corporates, right? So moving from quarterly to semiannual. Can you provide sort of some background as to why the exchange might be thinking of making this change? Is it feedback you've had from listed companies? Do you think it's going to change the appeal of listing on this exchange versus others? It'd be great to understand a little bit more about that.

And the second is on costs. You've mentioned you've had good positive jaws. What do you think is the sort of business as usual OpEx growth if we sort of take out the acquisition, what would be the underlying expense growth you're guiding for?

[Boon Chye Loh, executive]

Yes. In terms of the expenses, we do give a expense guidance at the beginning of every year. So we -- if you look historically, our expense growth has been in single digits, right? So around the mid-single digits. Going forward, we don't like to give long forecast, but we wouldn't expect the cost increase to be very high.

Dominic? My colleague, Tan Boon Gin, CEO of SGX Regco.

[Boon Gin Tan, executive]

Yes. So to address your question on why we're moving to risk-based quarterly reporting. So perhaps I can go back to the starting point. So the starting point was that we have -- or we had a size-based quarterly reporting, right? So the bigger companies, companies with a market cap of more than $75 million had to do quarterly reporting, and companies whose market cap is lower than $75 million did not have to do quarterly reporting. And we had feedback from the market that this distinction was arbitrary and not very meaningful because it was not targeting the companies that should be doing quarterly reporting or the companies that market wanted to see do quarterly reporting, right? So taking that feedback into account as well as looking at the international shift away from quarterly reporting, so that companies can focus more on the long term. For all these reasons, we decided to move to a risk-based approach. And so that's what we have today. So by and large, companies in general no longer have to do quarterly reporting. They can focus on long term. But there are companies, which are of higher risk, and these are the ones that have to do quarterly reporting.

[Boon Chye Loh, executive]

Dominic, any questions from webcast?

[Dominic Lim, executive]

Yes. Are there any plans -- this is also from a Saga Tree capital. Are there any plans to drive volume in popular [ NDF ] and such as the Korean one on to exchange trading?

[Boon Chye Loh, executive]

I'll let my colleague, Lee Beng Hong, responsible for the FICC business, to take the question?

[Lee Beng Hong;Head of Fixed Income, Currencies and Commodities, executive]

Yes. I think as can be seen in the results in the past few quarters, I think we have seen a very strong momentum in interest in using futures for hedging, risk managing and FX. We see that in CNH, we have seen that in India rupee. And I think definitely from a market demand perspective, I think 2 direction. One is an increase of fund that is flowing to Asia and the increased demand of risk management, and the general trend of increased use of futures because of capital, because of regulatory push, we see a big opportunity for us. And definitely, I think one of the big currency pair that -- we are looking at Korean won. We want to do more in Taiwan dollars and anything that our clients need, and those couple of paths will be a key focus for us.

[Dominic Lim, executive]

Okay. Two more questions relating to the quarterly reporting. The first one is from Kevin Lim from Nikkei. Is SGX itself going into quarterly reporting? And the second one is from Angela Tan from Singapore Press Holdings. Can SGX share its thoughts on Suncorp's disclosure on China ops in light of move away from quarterly reporting given that Suncorp is a big company?

[Boon Chye Loh, executive]

Mr. Chew will take the first question on SGX. But internally we will evaluate our response to the new risk-based approach to quarterly reporting. I think as many of you know, we currently report on a monthly basis market statistics, market statistics that describe the securities and derivatives market volumes, provides open interest information as well as listings about fixed income and equities. So we believe that this is a form of voluntary business updates from which our investors or shareholders can form or can get a view in terms of the performance of SGX. So this market statistics are also published on our website and really available to the public as well as the investment community. So we will provide an update when we have come to a view on our approach.

[Lay Chew Chng, executive]

On the second question, we obviously don't comment on specific company. But as you heard my colleague, Mr. Tan Boon Gin say earlier, I think size based financial reporting is too arbitrary. The previous rule was any company, above $75 million, has to do that. Below, you do not do that. We'd rather approach it from the risk base, which is why we're looking at the risk-based financial reporting, and we'll not go into specifics of any company.

[Dominic Lim, executive]

Okay. So there's a question from DBS. And the question is, is there a longer-term ROE target, given your new debt equity structure?

[Lay Chew Chng, executive]

We are still a company, a business with a very, very strong balance sheet. No doubt, with this acquisition, we will draw on external borrowing, but there's still a small proportion of our other financial metric. If we do further bolt-on acquisition, we'll share in terms of our overall capital structure, but this does not change the strong financial performance strength of the Singapore Exchange.

[Dominic Lim, executive]

A question from CIMB. This is on Scientific Beta. First question is, how was the valuation of EUR 186 million arrived at? Was there any specific methodology behind this? And number two, is management able to share the AUM split between U.S. and Europe?

[Lay Chew Chng, executive]

I think the regional split are clearly sensitive commercial matters, so we won't break it down, but you have seen the growth of the asset under application 10x from the 2015 to over USD 55 billion. We will continue to grow. And obviously, a smaller footprint in Asia, just where SGX would be helpful and impactful.

We knew Scientific Beta for a while. We took a deep look at their business, their business model, but more importantly, looking at the current business model SGX, which is really technology-driven on index calculation and index -- thematic index solutions and with a very strong R&D backing pedigree of Scientific Beta in designing indices for investment solutions, we saw a very strong complementary fit to really scale up our business. And it is a company that has done well with revenues and is profitable.

[Ishika Mookerjee;Bloomberg]

I'm Ishika from Bloomberg. I wanted to know if you have any visibility on the number of companies that are looking to scrap quarterly reporting now.

[Boon Chye Loh, executive]

From -- I mean this is only about slightly over 2 weeks. So I think company -- and it's only effective from 7th February. So clearly, companies are evaluating absorbing the news. Key to that is the corporate governance code clearly suggests and recommends with or without quarterly reporting continuous disclosure. So I think the companies who are evaluating and come to a decision and making the necessary announcement. Still early days.

[Unknown Analyst]

Goldman Sachs, Hong Kong. Can you share more color on the higher average fee per contract rate for your derivatives market aside from saying that there is more fee-paying customers?

[Hsien-Min Syn, executive]

There were more higher fee paying customers, particularly in the areas which saw genuine demand growth. And I think Beng Hong alluded to it, which is in the quarter just passed in commodities and FX. There was tremendous volume growth. A lot of that growth was driven by end clients' real money.

Now in the equity derivatives space, I think all across Asian equities, if you look at even the comparable exchanges, say, Japan, Hong Kong, volumes fell across the board between 20% and 30%. So what happened in those cases is that many of the participants who benefit from volume-based incentives, market makers, in particular, their volume contribution fell dramatically. Because the volume drops are very significant. In Japan I think the Nikkei complex as a whole dropped 30% in volume. So you saw a very high uptick in the fee per contract, and that was driven not just by real money demand in commodities and currencies but also a quite large diminution of market maker participation in the equity derivatives space. So across the board, that lifted fee-per-contract.

[Unknown Analyst]

I'm [indiscernible] from the [ H ] Singapore. So I have a question about derivatives. So not too long ago, derivatives was a key business for SGX. But recently, the numbers have been dropping. And this year it's -- this quarter, it's down 18%. Is this a concern to the company? And if so, what's going to be that? What's the next step forward?

[Boon Chye Loh, executive]

The derivatives business continues to be a key, important and also a growing business. I don't think we can judge on a year-on-year basis. And I think importantly, to look at it in aggregate, is the business is overall growing. What you saw in the second quarter collectively across all the underlying markets. And as Michael said, and some of the other derivatives market volume has come down. Now we gained market share, and our overnight session has also gone up in a greater contribution and greater absolute terms. So it clearly continues to be a solid and strong business for us.

[Lay Chew Chng, executive]

It's also worth adding that the derivatives markets are not just equity derivatives, so it's not the [ SL ] exchange. We're seeing a significant growth in our FICC space. So currencies and commodities continue the strong momentum as well.

[Boon Chye Loh, executive]

Okay. Any other questions here? Okay. Thank you for attending here, and thank you for your attention. For those of you celebrating the new lunar year, wishing you a successful and prosperous year ahead. For those of you who are enjoying the long weekend, spend time with family and good health. Thank you.