drivers of growth at sfe fia asia derivatives conference august 2005, beijing sydney futures...

Drivers of Growth at SFEFIA Asia Derivatives ConferenceAugust 2005, Beijing

Sydney Futures ExchangePeter HiomExecutive General Manager, Business Development

Brief Overview of SFE

• Exchange– 54m contracts in 2004– Largest interest rate derivatives market in Asia Pacific– Publicly listed

• Products– Interest rate (short, medium and long term)– Equity (index, sectors, individual shares)– Commodities– Currency

• Platform– Electronic– Global Distribution– 24 hour

SFE Annual Volumes

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Total Annual Exchange Volume

Drivers of SFE Growth

• Overall Drivers– Cyclical– Secular– Organic

• New Product Development– 30 Day Interbank Futures Contract

• Access and Distribution– Extremely easy to obtain access without regulatory obligations– Remote participation however is not so easy

Overall Drivers

OrganicGrowth

SecularTrends

CyclicalFactors

GDP GrowthBalance Sheet GrowthNew Products Customer Acquisition

Basel 2, IAS 39/FAS 133Growth of CTAs/ hedge funds

Compulsory superannuation

Spread differentialsMarket volatilityCurrent account deficitOffshore issuance into AustraliaAbsence of growth in CGS

30 Day Interbank Futures Contract

30 Day Interbank Cash Rate Futures Average Daily Volume by Month* and Month End Open Interest

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Aug

-03

Sep

-03

Oct

-03

Nov

-03

Dec

-03

Jan-

04

Feb

-04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-0

4

Aug

-04

Sep

-04

Oct

-04

Nov

-04

Dec

-04

Jan-

05

Feb

-05

Mar

-05

Apr

-05

May

-05

Jun-

05

Jul-0

5

Mo

nth

En

d O

pen

Inte

rest

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Ave

rag

e D

aily

Vo

lum

e

Average Daily Volume Month End Open Interest* includes Non-Traded Volume

30 Day Interbank Futures Contract

• Complimentary to well developed Overnight Index Swap (OIS) over the counter market

• Available for trade monthly, out to 12 contract months• Similar to the CBOT Fed Fund futures contract• Launched two years ago and now a benchmark product in

Australia• Supported by an official market maker who was also a major

participant in OIS market• Average daily volume approximately 6,000 contracts, daily

record 20,000 contracts• Diverse user base, globally distributed.

International Customer Acquisition

Access and Distribution

• International Communications Network– Europe: London– United States: Chicago/New York– Asia: Hong Kong– Australia and New Zealand

• Software Vendor Compatibility– All 13 major vendors now coded to SFE– Plus SFE proprietary trading terminal (SYCOM)

• Streamlined Access Model– Working with SFE Participant brokers– Eliminating paperwork where possible

International Customer Acquisition

Sales and Marketing

• Regional Sales Management– United States Office (Chicago)– Europe and Asia managed remotely

• Customer Segmentation Central to Sales Effort– Database development and analysis– Targeting and tracking– Individual and Team KPI’s

• Marketing Support– Typical marketing team, plus– University PHD Team led by Fulbright Scholar

International Customer Acquisition

Results YTD

• SFE Exchange growth YTD = 15%• SFE International Growth = 41.5%

United States = 38.9%

Europe = 53.9%

Asia = 340%

• Direct Customer Acquisition = 38• Indirect Customer Acquisition = unknown

Thank You

Sydney Futures ExchangePeter HiomExecutive General Manager, Business Development