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Singapore Exchange

10 August 2005

FIA Asia Derivatives Conference

Asian Financial Markets Become More

Mainstream

Linus KohExecutive Vice PresidentHead of Products &ServicesSin a ore Exchan e

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Since 1999, the global market for exchange tradedderivatives has more than tripled from 2.4b to 8.9bcontracts Growth has been driven primarily by financial derivatives

Equity Indices

Interest RateIndividual Equities

Ag. Commodities: Soyabean futures (Dalian, Tokyo Grain Ex), Cornfutures (CBOT)

Energy Products: Crude oil & unleaded gas futures (NYMEX)Non-Precious Metals: Copper futures (Shanghai Futures Exchange)Foreign Currency / Index: EuroFX (CME)Precious Metal

s: Gold & silver futures (NYMEX)

Source:

FIA

Equity Indices (ex-KOSPI)0

1

2

3

4

5

1999 2000 2001 2002 2003 2004

Contracts(Billions)

and has kept pace with OTC markets

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In 2004, the top 10 derivatives exchangesaccounted for 74% of the total volume forexchange traded derivatives

2004Rank

Top Contract Millioncontracts

1 Korea Futures Exchange (KRX) Kospi 200* 2,586.8

2 Eurex Euro-Bund Futures 1,065.6

3 Chicago Mercantile Exchange (CME) Eurodollar Futures 805.3

4 Euronext.liffe Euribor Futures 790.4

5 Chicago Board of Trade (CBOT) T-Note Futures 600.0

6 Chicago Board Options Exchange (CBOE) Equity Options 361.1

7 International Securities Exchange (ISE) Equity Options 360.9

8 Bolsa de Valores de Sao Paulo (Bovespa) Equity Options 235.3

9 Mercado Mexicano de Derivados (MexDer) TIIE 28 Futures 210.4

10 American Stock Exchange (AMEX) Equity Options 202.7

Total 7,218.5

Source: FIA

* The KOSPI 200 contracts, transferred from KSE to KOFEX in 1/04, are of a low notional value and retail dominated

Since 1999, Eurex, Euronext.liffe, CME, CBOT and CBOE have been among

the top 10 derivatives exchanges with growth greatly due to their financialderivatives contracts. Korea is the only Asian Exchange in the top 10.

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In 2004 (as in 2003), Asia / Pacific captured the largest share of theglobal market for exchange traded derivatives, driven primarily byKRXs Kospi 200 options & futures.

Asian exchanges continue growing, but are notquite mainstream yet

Source: FIA

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Strong economic growth

Average Asia Pacific GDP growth of 6-7% forecast to outpace that of the OECD

All factors point to this being the decade forderivatives growth in Asia

disproportionately increasing endogenous interest in commodities, and inboundparticipation in equities

Increasingly sophisticated investors

Rising education levels & increasing standards of living

High degree of speculation among retail investors

Developing infrastructure for technology and telecommunications

Korea: World-class telecommunications infrastructure with highest broadbandpenetration

Rank Country

17 China25 Singapore

26 Hong Kong

Rank

101 Unit120

Sw121 Aus

Source: Central Intelligence AgencyDate of Information: 2004 est.

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Electronic trading has shifted the competitive landscape for exchanges

Migration to electronic trading has allowed for

greater geographic reach via remote direct trading access (e.g. CME, NYMEX), new business opportunities as systems solution providers (e.g. OMX, Euronext),

&

extension of services into order routing and back office operations

This has provided exchanges with an opportunity to increase profit margins,

However, it has also lowered barriers to entry for competition & intensified price

competition based on greater cost efficiencies

The emerging global competitive landscape

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Many exchanges are now also motivated by shareholder requirements

new exchanges have established themselves as corporate entities whilstexisting exchanges have demutualized and/or listed


Demutualisation

2004 Osaka Securities Exchange, Bursa Malaysia

2002 Chicago Mercantile Exchange

2001 Tokyo Stock Exchange, Paris Bourse, Deutsche Bourse, Oslo

Exchanges2000 Toronto Stock Exchange, Sydney Futures Exchange, London

Stock Exchange, Hong Kong Stock Exchange, New YorkMercantile Exchange & Pacific Exchange

1999 Iceland Stock Exchange, Athens Stock Exchange, StockExchange of Singapore, Singapore International MonetaryExchange, London International Financial Futures and OptionsExchange

1998 Australian Stock Exchange1997 Amsterdam Exchanges, Borsa Italiana

1996 Copenhagen Stock Exchange

1995 Helsinki Stock Exchange

1993 Stockholm Stock Exchange

Incorporation / Listing

2004 Bursa Malaysia, InternationalSecurities Exchange

2003 OMHex/OMX

2002 Chicago Mercantile Exchange,Toronto Stock Exchange,Sydney Futures Exchange

2001 Euronext, London StockExchange

2000 Hong Kong Exchanges &Clearing, Singapore Exchange

1998 Australian Stock Exchange

1995 Tradepoint/virt-x

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Customers have also begun looking for integrated offerings across markets

commoditization of execution services

growing demand for bundled clearing services, asset class and marketintegration, new trading and market data tools


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Customers have also begun looking for integrated offerings across markets

As a result, competition among exchanges has intensified. Many exchanges are:

aggressively expanding into other markets, and

concurrently using price as a competitive lever.

In response,

some European Exchanges are moving to offering fully integrated services,

while some US Exchanges are bridging the gap between futures & options,


other exchanges are using M&A as a general growth strategy

Euronext.

liffeEurex

Euronext

LCH.Clearnet

Euroclear

Derivatives Trading

CashTrading

Clearing

Settlemen

t

DeutscheBourse

ClearstreamClearing

ClearstreamSettlement

100%

100%

50%

25%

10%

3.6%*

100%

Europe

* Deemed interest may be higher

US

CMECBOT

CBOE FuturesOneChicago

PBOTNYMEX

NYBOT

ISEAMEXCBOEPHLX

BOXPCX

Futures Exchanges OptionsExchanges

PHLX reviving PBOT tolist equity index futures

CMEattempted toacquire ISE

CBOE opened a futuresexchange subsidiary

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presents a number of challenges to AsianExchanges Global competition entering Asia

CME established first Asian telecommunications hub in Singapore

CBOT exploring telecommunications hub in Japan

Difficulty of cross-border integration / co-operation

Regulatory barriers e.g. capital controls, restricted licenses

Incompatible technology & market infrastructure

Lack of investor familiarity with regional markets

Concerns about retail market speculation Slowdown of Kospi futures and options trading following steps to curb retail

speculation by raising initial deposit requirements

Asian Exchanges could respond by:

expanding their suite of derivatives products to meet complementaryonshore/offshore demand,

further lowering regulatory and infrastructure barriers, and developing alliances.

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In December 2003, we commissioned OMX to develop an integrated tradingengine for our securities and derivatives market. SGX launched Quest-DT inAugust 2004.

We are progressively launching existing floor traded products electronically.

We have offered margin efficiency to customers as a means of enhancingtheir capital efficiency through enabling margin offsets in the form of inter-commodity spreads across different equity-based contracts including Nikkei225, MSCI Taiwan & MSCI Singapore.

We are developing & implementing an over-the-counter (OTC) clearingfacility for energy derivatives and forward freight agreements in 1Q 2006.

Update on SGX Developments

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Total electronic trading volume grew 330% in the 1st half of 2005

Achieved an average daily volume (Jan-Jun 05) of 53,400 contracts

Performance Growth in Trading Volume

Nikkei 225 Index Future 19% in 1st half of 2005

Mini JGB Future 18% in 1st 3 mths after launch

Record Volume (Jun 05): 198,806Record OI (Jun 05): 78,268

MSCI Taiwan Index Future 38% yr-on-yr monthly trading volume

Record Volume (Jun 05): 816,250

Record DAV (Jun 05): 158,061

9.2%

67.0%67.6%

78.1%

40.7%

45.1%39.1%

31.3%

28.0%

15.5%12.6%11.8%12.2%

8.6%10.7%7.8%

8.3%8.5%

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

Jan-0

Feb-0

Mar-0

Apr-0

May

-0

Jun-0

Jul-0

Aug-0

Sep-0

Oct-0

Nov

-0

Dec

-0

Jan-0

Feb-0

Mar-0

Apr-0

May

-0

Jun-0

TradingV

ol

e-NK

e-JGB

e-TW

SGX Quest

Growth of SGX Electronic Market

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Singapore Exchange

FIA Asia Derivatives Conference

Asian Financial Markets Become More

Mainstream

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