International Financial Markets

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Exchange banks on derivatives for growth Summary SINGAPORE Exchange, South-east Asia’s biggest bourse, is relying on derivatives for growth amid a dearth of merger and acquisition candidates in Asia. Exchanges worldwide have been building their futures and commodities businesses as the value of stock trading dropped 38 percent from June 2008, according to the World Federation of Exchanges. SGX has been searching for other growth avenues since its US$8.6 billion bid for ASX was rejected bu Australian regulators in April 2011. Located in Asia’s biggest oil-trading center, SGX also plans to introduce trading of gas and electricity futures in a few years, he said. Unit Asian Gateway Investments bought a 49 percent stake in Energy Market…show more content…
Why exchange banks are looking for growth? It’s mainly because the shareholders. Who owns the business? Shareholders own the business. Why they run the business? The final financial goal is earning money. In order to reach this goal, they need to manage the business. The goal of management is maximize the shareholders’ wealth, it’s the dominant goal of management in the world. There are fundamental differences between enterprises (CEO) and investors. CEO runs, for a given level of risk, as measured by a company's shareholders to maximize the return on capital gains and dividend. For the greatest after-tax income of business objectives. To achieve this goal, good governance measures should focus on developing and implementing strategies to ensure business growth and improve the company's equity value of the board. The reason why exchange banks focus on derivatives is simple: they have shareholders. Due to this reason, they have to satisfy the shareholders so they have to maximum the return of shareholders by increasing the gross profit. There are two basic ways to increase the gross profit: increasing the revenue, decreasing the every cost. But of course, the mainly one of these two is increasing the revenue. How can they increase the revenue? Looking for a derivative investment is a good idea-A cup only can hold one cup of water, what if we want two cups of water? We shall looking for another cup. It’s really the same
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