1 Singapore Exchange 10 August 2005 FIA Asia Derivatives Conference Asian Financial Markets Become More Mainstream Linus Koh Executive Vice President Head of Products & Services Singapore Exchange Limited

2 Since 1999, the global market for exchange traded derivatives has more than tripled from 2.4b to 8.9b contracts  Growth has been driven primarily by financial derivatives Equity Indices Interest Rate Individual Equities Ag. Commodities: Soyabean futures (Dalian, Tokyo Grain Ex), Corn futures (CBOT) Energy Products: Crude oil & unleaded gas futures (NYMEX) Non-Precious Metals: Copper futures (Shanghai Futures Exchange) Foreign Currency / Index: EuroFX (CME) Precious Metals: Gold & silver futures (NYMEX) Source: FIA Equity Indices (ex-KOSPI)  …and has kept pace with OTC markets

3 In 2004, the top 10 derivatives exchanges accounted for 74% of the total volume for exchange traded derivatives 2004 RankTop Contract Million contracts 1Korea Futures Exchange (KRX)Kospi 200* 2, EurexEuro-Bund Futures 1, Chicago Mercantile Exchange (CME)Eurodollar Futures Euronext.liffeEuribor Futures Chicago Board of Trade (CBOT)T-Note Futures Chicago Board Options Exchange (CBOE)Equity Options International Securities Exchange (ISE)Equity Options Bolsa de Valores de Sao Paulo (Bovespa)Equity Options Mercado Mexicano de Derivados (MexDer)TIIE 28 Futures American Stock Exchange (AMEX)Equity Options 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 financial derivatives contracts. Korea is the only Asian Exchange in the top 10.

4  In 2004 (as in 2003), Asia / Pacific captured the largest share of the global market for exchange traded derivatives, driven primarily by KRX’s Kospi 200 options & futures. Asian exchanges continue growing, but are not quite mainstream yet Source: FIA

5  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 for derivatives growth in Asia  …disproportionately increasing endogenous interest in commodities, and inbound participation 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 broadband penetration Source: Central Intelligence Agency Date of Information: 2004 est.

6  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

7  Electronic trading has shifted the competitive landscape for exchanges  Many exchanges are now also motivated by shareholder requirements  new exchanges have established themselves as corporate entities whilst existing exchanges have demutualized and/or listed The emerging global competitive landscape Demutualisation 2004Osaka Securities Exchange, Bursa Malaysia 2002Chicago Mercantile Exchange 2001Tokyo Stock Exchange, Paris Bourse, Deutsche Bourse, Oslo Exchanges 2000Toronto Stock Exchange, Sydney Futures Exchange, London Stock Exchange, Hong Kong Stock Exchange, New York Mercantile Exchange & Pacific Exchange 1999Iceland Stock Exchange, Athens Stock Exchange, Stock Exchange of Singapore, Singapore International Monetary Exchange, London International Financial Futures and Options Exchange 1998Australian Stock Exchange 1997Amsterdam Exchanges, Borsa Italiana 1996Copenhagen Stock Exchange 1995Helsinki Stock Exchange 1993Stockholm Stock Exchange Incorporation / Listing 2004Bursa Malaysia, International Securities Exchange 2003OMHex/OMX 2002Chicago Mercantile Exchange, Toronto Stock Exchange, Sydney Futures Exchange 2001Euronext, London Stock Exchange 2000Hong Kong Exchanges & Clearing, Singapore Exchange 1998Australian Stock Exchange 1995Tradepoint/virt-x

8  Electronic trading has shifted the competitive landscape for exchanges  Many exchanges are now also motivated by shareholder requirements  Customers have also begun looking for integrated offerings across markets  commoditization of execution services  growing demand for bundled clearing services, asset class and market integration, new trading and market data tools The emerging global competitive landscape

9  Electronic trading has shifted the competitive landscape for exchanges  Many exchanges are now also motivated by shareholder requirements  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, The emerging global competitive landscape  other exchanges are using M&A as a general growth strategy Euronext. liffe Eurex Euronext LCH. Clearnet Euroclear Derivatives Trading Cash Trading Clearing Settlement Deutsche Bourse Clearstream Clearing Clearstream Settlement 100% 50% 25% 10% 3.6%* 100% Europe * Deemed interest may be higher US CME CBOT CBOE Futures OneChicago PBOT NYMEX NYBOT ISE AMEX CBOE PHLX BOX PCX Futures Exchanges Options Exchanges PHLX reviving PBOT to list equity index futures CME attempted to acquire ISE CBOE opened a futures exchange subsidiary

10 …presents a number of challenges to Asian Exchanges  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 complementary onshore/offshore demand,  further lowering regulatory and infrastructure barriers, and  developing alliances.

11  In December 2003, we commissioned OMX to develop an integrated trading engine for our securities and derivatives market. SGX launched Quest-DT in August  We are progressively launching existing floor traded products electronically.  We have offered margin efficiency to customers as a means of enhancing their capital efficiency through enabling margin offsets in the form of inter- commodity spreads across different equity-based contracts including Nikkei 225, MSCI Taiwan & MSCI Singapore.  We are developing & implementing an over-the-counter (“OTC”) clearing facility for energy derivatives and forward freight agreements in 1Q Update on SGX Developments

12  Total electronic trading volume grew 330% in the 1 st half of 2005  Achieved an average daily volume (Jan-Jun 05) of 53,400 contracts PerformanceGrowth in Trading Volume Nikkei 225 Index Future19% in 1 st half of 2005 Mini JGB Future18% in 1 st 3 mths after launch Record Volume (Jun 05): 198,806 Record OI (Jun 05): 78,268 MSCI Taiwan Index Future38% yr-on-yr monthly trading volume Record Volume (Jun 05): 816,250 Record DAV (Jun 05): 158,061 e-NK e-JGB e-TW SGX Quest Growth of SGX Electronic Market

13 Singapore Exchange FIA Asia Derivatives Conference Asian Financial Markets Become More Mainstream