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Drivers of Growth at SFEFIA Asia Derivatives ConferenceAugust 2005, Beijing
Sydney Futures ExchangePeter HiomExecutive General Manager, Business Development
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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
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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
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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
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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
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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
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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.
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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
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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
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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
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Thank You
Sydney Futures ExchangePeter HiomExecutive General Manager, Business Development