Singapore Exchange: The Exchange Is the Infrastructure
The One-Liner
Singapore Exchange does not compete for market share. It is the market. And it collects a toll on every transaction that passes through.
That stopped me. If the U.S. exchange was publicly listed, was Singapore's?
I typed "Singapore Exchange" into the search bar, meaning to look up the SGX website, and S68 popped up instead. A listed company. The exchange itself, available for ownership.
I peeked at the figures then. The margins looked almost too clean. ROE above 30%. A structural monopoly. I bookmarked it and moved on, distracted by other positions, other priorities.
Years passed. When I came back to it, the stock had exploded.
The question now isn't whether I missed the easy entry. I did. The question is whether the business, not the price, still justifies a closer look.
What This Business Actually Is
Singapore Exchange Limited (SGX Group, SGX:S68) is Singapore's sole securities and derivatives exchange. Incorporated in 1999 and listed on its own exchange in 2000, SGX is not simply a venue where buyers and sellers meet. It is the infrastructure through which capital flows in and out of Singapore's financial system. 1
The business operates across four segments: Equities – Cash, Equities – Derivatives, Fixed Income, Currencies and Commodities (FICC), and Platform and Others (market data, connectivity, indices). But the segmentation understates how tightly integrated the model is. SGX spans the full trading lifecycle: listing, trading, clearing, settlement, custody. Every transaction generates fee income at multiple points. 2
The numbers confirm the model is working. In FY2025 (year ending 30 June 2025), SGX reported operating revenue of S$1.37 billion, up 11.3% year-on-year, and adjusted net profit of S$609.5 million, up 15.9%. The strongest year in the exchange's listed history. 3
The business doesn't need to convince anyone to use it. That's the point. SGX isn't selling a product. It's operating the system.
The harder question is whether the price still leaves room for returns to compound into shareholders' hands, or whether the market has already claimed them.
Why This Business Exists (and Why It Persists)
The surface-level answer is straightforward: SGX holds the exclusive licence to operate Singapore's securities and derivatives exchange. No competitor can legally offer an equivalent service without a regulatory mandate that, by design, is not available. This isn't a dominant market position. It's a statutory monopoly, granted and overseen by the Monetary Authority of Singapore. 4
But calling it a "regulatory moat" and stopping there misses what makes it durable.
Network effects
Liquidity attracts liquidity. Once SGX established itself as Asia's primary offshore venue for China and India exposure (the FTSE China A50 futures, GIFT Nifty, iron ore swaps, INR/USD FX), those contracts became self-reinforcing. In FY2025, currency derivatives volumes grew 49.7% to 73.6 million contracts; commodity derivatives rose 6.2% to 65.3 million contracts. Displacing SGX would mean rebuilding the entire institutional participant base, pricing infrastructure, and clearing relationships somewhere else. ^5^ ^6^
Infrastructure lock-in
Clearing and settlement aren't ancillary to trading. They're the nervous system. SGX's Central Depository handles post-trade functions for equities, including the daily buying-in process: when a seller fails to deliver, SGX purchases the shares on the open market and completes settlement on behalf of the buyer. That's not a side function. It's the backstop that makes the system trustworthy. Participants connect through years of integration, compliance work, and capital commitment. Switching costs aren't financial. They're operational and relational. ^7^
Recurring data and connectivity revenue
Market data, indices, and co-location services generated S$238 million in net revenue in FY2025, up 3% year-on-year, with data income up 8% and connectivity up 11.8%. Unlike trading fees, this revenue doesn't swing with volume. It's subscription-like: recurring, sticky, and it grows as more participants connect. Co-location demand reflects institutions building permanent, low-latency links to SGX. Every new connection makes the next one more likely. ^8^
SGX doesn't win by competing. It wins by being unavoidable.
The Moat's Real Boundary
The honest assessment requires naming where the moat ends. SGX's dominance in Singapore is unconditional. Its position in derivatives, specifically Asia-themed index and commodity futures, is real and growing. But the equities listings market has been a different story.
Delistings outpaced new listings for years. In 2024, 20 companies delisted while only 4 new ones listed. In the first four months of 2025, at least 8 SGX-listed companies announced potential delisting and at least 11 received privatisation offers, with low liquidity and undervaluation cited as primary reasons. The number of listed companies reached a two-decade low by 2024. 9 10 11
Early signs suggest intervention may be working. In 1H FY2026 (July–December 2025), SGX recorded 15 new equity listings, compared to just 5 in the prior-year period, raising S$3.0 billion. Total market capitalisation rose 22.3% to S$1.06 trillion; retail participation hit a four-year high. The S$5 billion MAS Equity Development Programme and reforms from the Equities Market Review Group appear to be gaining traction. 12 13
This isn't a resolved problem. Delistings and privatisations continue. But the trajectory has shifted. Whether it sustains is the open question.
The moat is intact. But one part of the system, listings, has been quietly eroding. That's the tension.
Join free to access the complete First Principles Brief.
