Magnus Bocker, who led the $SGX(S68.SI) after the global financial crisis, has died of cancer at the age of 55. Here’s how SGX faired under him.
Prior to Mr Bocker’s role as SGX CEO from 2009 to 2015, he was the President of the Nasdaq Stock Market, and before that, he was the creator of OMX, the Nordic exchange. Mr Bocker held over three decades of experience in the financial industry and was often regarded as a driving force for change.
Here’s a recap of Magnus Bocker’s journey and some of the significant events during his tenure with SGX:
Mr Bocker stated then that the 3 reasons why he decided to join SGX were:
1. He saw a paradigm shift from the West to East, and he thought that Asia will play a far more significant role in the years to come, opening up new opportunities for SGX
2. Singapore was recognised as the world’s easiest place to do business, and the world’s 2nd leading financial centre after New York due to our policies, stance, approach and trade agreements. Singapore has also developed a strong regulatory framework and tax-friendly policies
3. SGX’s ability to reinvent itself and emerge as leader in market development, and he believed that SGX will continue to thrive as the Asian Gateway
Mr Bocker attempted to merge SGX with ASX in 2010. SGX offered $10.7b to take over ASX to form ASX-SGX, which will form the 5th largest listed exchange group, and the deal will create an expanded platform for global customers to exploit opportunities in the Asia-Pacific region. Mr Bocker said that by 2020, nearly half of the global GDP will be in Asia-Pacific, and it was an opportunity he could not let go. However, all these will eventually fall due to political opposition in Australia.
Quoted by The Telegraph,
"Magnus Bocker, said that “in 2020, in less than 10 years from now, nearly half of the global GDP will be in Asia-Pacific.”
“It’s an opportunity that we cannot let go,” he added in a news conference.
In terms of total number of listings, the ASX-SGX will overtake Tokyo to become the second largest listing venue in the Asia-Pacific region after Bombay, offering more than 2,700 companies from over 20 countries including 200 from Greater China, the joint statement said.
The merged bourses will also offer access to the largest institutional investor base outside the United States, with combined assets under management estimated at $2.3 trillion including money from sovereign wealth funds."
However, the plans to merge SGX with ASX never materialized.
A total of $20.8b was raised on SGX. IPO of Hutchison Port Holdings was the largest to date in Southeast Asia, at US$5.5b. SGX was the most international among exchanges, with 41% of listed companies coming from more than 20 countries. This included 150 China companies, the most for any exchange outside of China. Being a firm believer in corporate governance and responsible investing, Mr Bocker helped to develop guidelines and promote the importance of Sustainability Reporting. Mr Bocker also invested heavily to upgrade SGX’s trading engines and technological infrastructure, demonstrated by the opening of a state-of-the-art SGX Data Centre, as well as the launch of the world’s fastest securities trading engine.
The IPO market saw a sharp downturn with only $825m raised. Thankfully, the derivatives market continued to gain from increased levels of risk management activities, and SGX became the largest offshore market for Asian equity derivatives. There was relatively low retail investors participation due to risk adverseness since the GFC, hence Mr Bocker led the team to embark on a wide-ranging plan to stimulate retail activity. Mr Bocker decided to remove the lunch break although he faced protests from remisiers, and reduced the minimum bid sizes for securities to lower market participation costs for investors. In recent news, these efforts are soon going to be reversed when SGX announced that they will be bringing back the lunch break.
To boost liquidity, SGX under Bocker provided rebates for high-frequency market makers, but this raised concerns and many argued that doing so would prejudice retail investors.
According to The Business Times,
"Such a possibility has to be considered partly because Singapore is a single-exchange market. In more fragmented and deeper markets such as the United States, high-frequency traders can make money by arbitraging price differences between exchanges or correlations within markets.
In Singapore, those opportunities exist mainly in the derivatives market, where about 30 per cent of volumes are already attributed to high-frequency players. With derivatives contracts, traders can exploit inefficiencies through parallel products that trade elsewhere in the world, for example."
SGX reported the highest net profit since 2008. Past year’s efforts paid off and there was a rebound in trading activities and an increase in retail participation.
SGX experienced a decline in value of securities traded, caused mainly by the reduction in trading of small-cap stocks due to the penny stock saga that wiped $8b off the value of 3 shares(Asiasons Capital, Blumont Group and LionGold Corp). Since then, SGX tightened their processes to better protect the interests of investors.
According to The Business Times:
"The fallout had reverberated to a wider band of penny stocks, most of them connected through a tangled web of common shareholders or directors. The penny stock rout on the fateful morning of Oct 4, which wiped out S$5 billion in market value in the three counters within the first hour of trading, had led Singapore Exchange (SGX) to suspend trading in the counters; it later slapped a two-week trading curb on them which some say had exacerbated the losses."
Prior to Mr Bocker leaving in 2015, SGX came under fire for a number of serious trading outages.
According to The Straits Times:
"The Nov outage in SGX – home to one of the most established capital markets in the Asia Pacific – caused a malfunction, which meant the line prices stopped moving, causing panic in the markets.
A Board Committee of Inquiry was set up after the Nov incident to independently oversee probe into the incident, review the bourse’s incident management and crisis communications.
MAS also issued directives to SGX for several remedial actions, including strengthening of its monitoring system capabilities to allow timely and accurate problem identification, improve crisis preparedness and improve its crisis communication to provide prompt information to all stakeholders."
There seemed to be some unhappiness from the public during this period of time, as seen in this petition.
Casting aside the negative instances, one thing for sure is that SGX successfully emerged stronger after the GFC under the leadership of the late Mr Bocker.
It is now up to the current management to navigate through the current challenges and bring SGX to greater heights.
SGX’s current price is $7.59. It’s YTD capital gains is around 6% and dividend yield is around 3.7%