Good morning, ladies and gentlemen, and to those viewing via the webcast. My name is Liana Chu from Investor Relations. Happy New Year and a very warm welcome to SGX Group's First Half FY 2025 Results Briefing. We will begin today's session with a presentation of the financial results by our new CFO, Mr. Daniel Koh. Dan took on the role as CFO on 1st of December 2024. Following Dan's presentation, our CEO, Mr. Loh Boon Chye, will present the business updates. We will have a question-and-answer session later on. Please wait for the microphone to reach you, and do identify yourself before you ask your questions. It is now my pleasure to invite Dan up on stage to present the financial results. Dan, please.
Good morning. Thank you for joining us today. As a keen market observer, it is enthralling for me to be standing on this side of the stage, having joined SGX at such a vibrant time. Today, I am delighted to present a strong set of results as the new CFO. SGX Group delivered strong financial performance for the first half FY 2025. Both our half-year operating revenue and earnings have reached their highest levels. Group net revenue has increased by 15.6% to SGD 646 million, driven by broad-based growth across all operating segments. Group expenses, on an adjusted basis, have stayed comparable from a year ago, while adjusted group NPAT has increased 27.3% to SGD 320 million. Adjusted operating profit margin and adjusted NPAT margin have both showed strong improvement by 6.1% and 4.5%, respectively.
As mentioned earlier, the revenue performance was driven by broad-based growth, especially in cash equities, derivatives, and our OTC FX franchise. Our cash equities business grew significantly, driven by elevated investor interest. Net revenue increased by SGD 35 million, or 22%, and the securities daily average value, or SDAV, increased 31% to SGD 1.26 billion, driven by strong investment flows into the index stocks and REITs on the back of rate cuts, robust market fundamentals, and other macro factors. Our derivatives franchise, which comprises futures and options on currencies, commodities, and equities, also demonstrated strong growth. This was driven by proactive steps that we have taken in broadening client participation amidst higher global market volatility. Total net revenue from our derivatives suite grew SGD 35 million, or 14%, driven by 20% growth in overall derivative daily average volume across all asset classes.
This has been partially led by our efforts in driving client expansion in the T+1 session, as well as cross-selling. T+1 traded volume contributed about 20% to the overall derivatives traded volume. Treasury income, or TI, was comparable against a year ago, driven by higher collateral balances from the derivatives franchise, partially offset by declining interest rates. Our OTC FX business continued to see consistent and robust growth. Net revenue grew SGD 14 million, or 36%, with average daily volume increasing by the same magnitude to $136 billion. This was driven by our continued efforts in expanding the client base and enhancing the platform with cutting-edge functionalities. We are also pleased to see that OTC FX EBITDA contribution to the Group EBITDA grew to 5% compared to 3% a year ago. This clearly demonstrates our efforts in improving the operating margin as the business scales.
As communicated previously, starting from this financial year, we have implemented net revenue reporting to better reflect the underlying economics of our business while also aligning with global practice. Transaction-based expenses, i.e., processing and royalty fees, have been moved from operating expenses and netted off against operating revenues to derive net revenue, as shown on the left-hand side of the slide. In the same manner, processing and royalty fees are netted off from the average fees to derive the average net fee. The derivative average net fee for the first half of FY 2024 is now SGD 1.31 compared to SGD 1.54 reported previously. In a like-for-like comparison, the average net fee this period is now SGD 1.30. We have also provided additional information in the performance summary on the impact of constant currency. This will help the comparison of financial performance across periods without the impact of currency movements.
Let me now elaborate on the Group's net revenue performance across our four operating segments. The growth was attributed to the Group's effective execution of the multi-asset strategy amidst macro tailwinds. Our Fixed Income, Currencies and Commodities segment grew SGD 19 million, or 13%, and accounts for 25% of total revenue. I had touched on OTC FX earlier. For the exchange-traded currency segment, we remain as Asia's largest currency futures exchange, and several record volumes were set amongst our key contracts. For the commodity segment, apart from the growth in iron ore products, several pioneering contracts also demonstrated growth momentum. So overall, the FICC segment revenue remains on track to grow at a low- to mid-teens % over the medium term. The cash equities revenue growth was driven by the higher SDAV mentioned earlier and higher average clearing fees. This segment contributes 30% to our total revenue.
Equity derivatives revenue increased by SGD 32 million, or 22%, driven mainly by the volume increase in our flagship FTSE China A50 and GIFT Nifty futures contracts. This segment accounts for 27% of total revenue. Finally, Platform and Others' revenue increased by SGD 2 million, or 2%, primarily due to higher colocation sales and repricing of connectivity services, partially offset by lower indices revenue. This segment now accounts for 18% of total revenue. Moving on to expenses. Now, we have maintained cost discipline, and our adjusted expenses remain comparable. Staff costs increased by SGD 9 million, or 6%, primarily due to higher variable bonus provision in line with higher profits. Technology expenses remain comparable. Depreciation and amortization decreased by SGD 4 million, primarily due to lower depreciation of technology assets. Other expenses decreased by SGD 4 million, with lower impairment of trade receivables and lower spending on marketing and traveling.
Now, we expect the full-year expenses to be at the lower end of our 2%-4% increase guidance for FY 2025. On capital expenditure, we incurred SGD 22 million in the first half FY 2025 and expect our full-year CapEx to be at the lower end of our SGD 70-75 million guidance. Now, to reiterate what we have communicated previously, our CapEx will be on an uptrend as we modernize the trading and clearing platforms and data centers. We anticipate overall CapEx to remain below the historical average of 7% of Group revenue over a cycle. This slide shows the reconciliation between our reported and adjusted earnings. The difference is due to non-cash adjustments and one-off items, which I will further elaborate upon.
First is a net fair value gain of SGD 19 million, mainly from our investment in a private equity fund managed by 7RIDGE, which holds the company Trading Technologies. Reflecting its strong operating performance, our investment was revalued upwards by SGD 8 million. Second, we took a SGD 2 million impairment due to the lower-than-expected performance of an associated company. Now, the fair value adjustments and impairment flow through to our P&L due to the accounting classification, given their non-cash nature. These are removed here for the purposes of adjusted earnings. Third, we recognize a one-off gain of SGD 8 million on the sale of our financial investment in the Philippine Dealing System. Finally, we have a further adjustment of SGD 5 million, mainly from the amortization of purchased intangible assets. Our balance sheet remains robust.
Moody's reaffirmed our Aa2 rating in November 2024, and this remains the highest credit rating it has assigned to any exchange group. Gross debt increased by about SGD 7 million, mainly due to the longer-term lease as we renewed our office space and data centers in early 2024. This was partially offset by the reduced borrowings during our refinancing in March 2024. Our leverage ratios remain at a healthy level. Despite an increase in gross debt, the gross debt-to-EBITDA ratio, or leverage ratio, declined from one to 0.9 times due to our improved margins. Our interest coverage ratio decreased to 56 times from 113 times, mainly due to the higher interest expense when we refinanced our Euro zero-coupon convertible bonds with SG D coupon-bearing notes.
The Board of Directors has declared an interim quarterly dividend of SGD 0.09 per share, bringing the total dividends in the first half FY 2025 to SGD 0.18 per share. This represents an increase of almost 6%, which continues to be in line with our aim to increase dividend per share by mid-single-digit percentage of CAGR in the medium term, subject to earnings growth. With that, let me now hand over to Boon Chye, our CEO, who will deliver the business update. Thank you.
Good morning, everyone. Thank you for joining us this morning. As Daniel shared, we performed strongly across the board in the first half of this year. The breadth and depth of our multi-asset offering, together with our efforts to broaden our products and customer base, position us well to capture market opportunities in 2024.
Financial markets were volatile due to macroeconomic and geopolitical events, including a record number of elections around the world and stimulus measures in China. Amidst the volatility, our clients turned to SGX to manage risk effectively and efficiently round the clock. Across our derivatives suite, we see customers trading more products and higher activity in our overnight T+1 session. Let me now update on our key business segments, starting with FX. We are pleased that in the first half of FY 2025, our FX franchise achieved a record average daily volume of over $154 billion across OTC FX and listed FX futures. We successfully grew our OTC FX volumes on the back of higher adoption as we enhanced our platform functionalities. First-half revenue for OTC FX is now at $55 million and is on track to contribute mid- to high single-digit % of Group EBITDA in the medium term.
In listed FX, our first-half daily average volumes rose 40% year-on-year, led by our CNH and INR contracts. We also see traction in our Korean Won contract, whose volume has increased nearly four times from two years ago. Besides multiple all-time high volumes for flagship products, we achieved a significant 75% increase in open interest to $23.4 billion in notional terms. Notably, there is rising interest in our FX futures coming from new market participants such as buy-side firms, asset managers, hedge funds, and Commodity Trading Advisors looking to hedge their currency risk. A sizable 35% of our FX futures DAV are now traded during U.S. and European hours. All in, we are optimistic that we can build on our successes as we enlarge and integrate our FX marketplace.
Moving on to commodities, we continue to be the leading international exchange for bulk commodity derivatives, led by our flagship iron ore contract. Our efforts to expand the ecosystem and increase financial participation in iron ore are paying off. First, the proportion of screen trading of iron ore futures has increased 2.6 times in the past three years, from 28%-73%. Financial participants accounted for more than half of our volumes in the first half. Second, volumes coming in during our T+1 session are now over 20%, compared to 15% three years ago. This all points to the significant role of iron ore for global portfolio risk management and diversification. We achieved a key milestone in our journey to promote iron ore index, index investing in iron ore as a portfolio diversifier. Since January this year, our iron ore contracts are included in the Dow Jones Commodity Index.
This follows earlier inclusion in other commodity indices in 2018 and 2022, which reflects the relevance of iron ore in a global portfolio. In equity derivatives, we had a strong half with daily average volumes reaching 728,000 lots on the back of broad-based volumes in our A50 and GIFT Nifty contracts. T+1 DAV has grown to 15%. Our derivatives ecosystem supported the rise in global usage of our A50 contract amidst market uncertainty. Our active engagement with clients has led to a more diversified client base. We are confident that more clients will make SGX their venue of choice for investing and risk management, given the liquidity and quality of our products. Moving on to our cash equity markets, the Straits Times Index broke multiple records and was one of the best-performing indices in the region.
This showed in the growth of our SDAV to SGD 1.26 billion in the first half of FY 2025. We aim to build on this momentum as we introduce more trading products, as well as enhancing our retail outreach in the region. In the first half, we launched the Lion-China Merchants Emerging Asia Select Index ETF, depository receipts on Hong Kong-listed stocks, and Daily Leverage Certificates on the Magnificent Seven stocks in the US. This widens investment options for investors and enables them to diversify their portfolio. We also onboarded more brokers to enable regional access to SGX products. In summary, we will deepen and drive greater adoption of our multi-asset offering alongside the evolving needs of investors. We also observe improvements in our IPO pipeline. To further strengthen our ecosystem, we will foster deeper relationships with our customers and help them to better capture cross-asset opportunities.
There is a lot more room for us to expand our customer base across segments and globally. While there could be some moderation of macro tailwinds in the near term, we remain optimistic about our medium-term outlook. Our focus on broadening our customer base globally and across segments, as well as expanding and driving greater adoption of our products and solutions, sets the stage for market leadership, and we remain optimistic of achieving our revenue target, excluding Treasury income of 6%-8% growth in the medium term. With that, I end my presentation and will take questions together with my colleagues. Thank you.
Yes, we can take the first question.
Hi, good morning. Happy Chinese New Year. So, is this on? Yeah, yeah, yeah, it's on. All right. Hi, I'm Jovi from Singapore. So, a few questions here.
I think December saw the fourth consecutive month of net buying in S-REITs. Data for January isn't out yet, but do you think this will continue in the current quarter, and could it even expand into other equities as well? And my second question, with rates expected to remain high, what is the outlook for securities trading volume, and should we expect also a strong second half? And my last question, I think, on cash equities, Boon Chye, you mentioned increasing retail outreach in the region. So, maybe apart from the SDRs, could you just provide more color on what these outreach efforts are like? Thanks.
Can you clarify your first question? I missed a bit of it.
Yeah, so I think just looking at the data for the monthly data for December, you said there was the fourth consecutive month of net buying for S- REITs. Do you see this expanding into other equities? And yeah, for this quarter?
Yeah, thank you for the question. We are pleased, certainly, with the increased activity on the stock market. As I said, STI broke multiple levels of records in the first half of 2024 for 2025 for the financial year. Interest rates, obviously, had diverging movements, but we did see increased participation, not just in the banking stock, but I think across the REITs and the STI, the index stocks. We will build on this momentum. There will be more product launches, whether that's the SDR, DLC, leveraged ETFs. We're also looking to continue to onboard retail brokers, outreach to institutions, research, and education. I think it's important for us to continue to focus on building what we've achieved so far.
Maybe Boon Chye, if I can.
Jovie, so when it comes to regional retail, just to unpack some of your questions, okay, let's start with REITs. Do we foresee further inflows? No, it's driven very much by expectations of improvement in some of the underlying markets that our REITs represent, for instance, in the U.S. It's not universally true that all REITs are recovering, but of course, also the interest rate environment, and it was pretty interesting that there was rotation from retail largely into REITs, into small and mid-caps, whereas the institutional started buying, so that was a lot of the impetus for driving the price momentum and the volume momentum. We're also seeing a broadening of interest regionally, and directly, I think you're all aware of the efforts we're making in SDRs.
It's not just a product initiative, because every time we do this, we also work with a partner broker or a partner exchange on the other side. The other ways we go regional, we go directly to work with brokers onshore to make sure that we promote access into our market. And in fact, we've seen something like a 60% increase in access into Singapore from regional markets, which, as you know, in the past six months have flattened a bit. The biggest, actually, regional inflow that we saw in the past six months was through the ETF Connect, where it's one year old, the SEA+ TECH ETF that we launched. And it's grown from, yeah, it's grown from SGD 100 million - SGD 500 million. And that's driven very much by Chinese inflow into the ETF that was listed here, the Huatai-PineBridge SEA+ ETF.
Right, so it's pretty broad-based, driven by the performance of our market, the attraction of our market in the past six months. Did you get that? Yeah, okay, thanks.
Yeah, Nick.
Oh, sorry. No, that's away from the microphone. We'll come back to you. Okay, thank you very much for taking the question. Three questions from me, actually. The first is just the comment you've made on clearing funds. But as of the 15th of January, you've reduced your commitment to the clearing funds. I just wonder if you could talk a little bit about why that's happened and what we should take from that. Presumably, it's a benefit to cash flow going forward, whether it's sustainable. The second question is that I just wonder if you could talk a little bit more about the T+1 trends you're seeing.
I mean, it seems to be coming across various derivatives, but you're seeing an increase in T+1 volume. So, I just wonder if you could talk about what's driving that and whether you expect that to increase further. And I guess the same question on the SGX trading on the iron ore. And then finally, I just wonder if you've got any updates you can provide us on where we are in terms of the MAS review on the equity market.
Thanks, Nick. I'll let my colleague Agnes, our CRO take your first question.
Thanks, Nick, for the question. Just for the benefit of all, the clearing fund is actually our last resort plan to manage any default from the member. The first line of defense is always the margins that we collateralize for the risk that we carry.
The reason for the reduction is, if you noticed earlier in the year, we had, last year, we had increased the Clearing Fund by SGD 50 million. That was to recognize certain concentrations in risk that's brought on by members. How we go about that is the Clearing Fund is sized according to the stress testing scenarios that we, very conservative stress testing scenarios that we apply to the membership. As these risks diffuse, it is only natural that we should bring it down. The SGD 50 million decrease is not just a contribution from us. It is actually a contribution from the members as well, because it's mutualized. There's no need, because we adopt a defaulters' pay model, there's no need to over-commit members and our contribution if you know that your margin collateral is sufficient to manage the risk.
Thank you, Agnes.
To your second question on the overnight volume T+1, how to expect that? We obviously have invested in our sales coverage globally, including, obviously, in Singapore. And as I said, in the last couple of halves, the European and the U.S. markets where we're also looking to expand. So, we've seen success in minimally cross-selling. And obviously, there's been much of a macro and geopolitical events outside of Asian hours. But markets don't sleep. They trade close to 24 hours in particular, FX. So, we see room to grow. Likewise, we see greater adoption potentially of the iron ore contract in terms of further financialization. We hope the index inclusion will also drive investment products and has space for the iron ore in any global portfolio diversification.
Can't give you a percentage of how they will grow, but I think at least in terms of the opportunity set, ability to cross-sell, engage more clients, that's what our teams will be looking to do. On the Review Group, you may have read a recent speech by our chairman. I think it's important that for the Singapore stock market to grow and sustain its trajectory. All structural issues, policy issues have to be holistically addressed, including by SGX, all participants in the ecosystem, policymakers, and regulators. I think the ecosystem is very heartened that the Review Group is taking a very holistic view, diving into the issues holistically, addressing, looking to address demand, supply, and on the regulatory front. The Review Group is still ongoing, so I can't provide you with any update at this point.
Okay, thank you.
Chanyaporn Chanjaroen from Bloomberg.
Congrats on the numbers. I have two questions just to follow up a bit on Nick's question. Can you share a bit of colors on IPO pipeline and how the supply is going? And my second question, what can you tell us about succession planning for the CEO role?
I hope I can do better. Oh, yes, second question is not about the CEO. It's about the team we have, team's strength, not just my colleagues on stage, all my colleagues. So, it's a strong team. It's a team effort. When the time comes, the board will make the decision. But as of now, I think the team is driving and gelling well, and we hope to continue to improve on our results. On the IPO pipeline, as I said, we observe improved momentum.
There are deals that are being worked on by advisors, by banks, together with the issuers. We hope there will be market window, market opportunity for these deals, these transactions to be printed.
Just to follow up, do you have a preference for internal or external candidates? And also, you say that there are many, can you just at least quantify, will it be higher than last year, which the threshold is that high? On IPOs.
Oh, okay. Shall I take that? That's an easy question to answer. We certainly hope it will be higher than last year. And part of that is because of what Boon Chye said, right? We see issuers and the professionals becoming more active. That is heartening. That is usually a good sign. And to an extent that we haven't seen that level of improvement in recent years.
The other thing equally important is just the general market environment for listings, because that environment hasn't been difficult just here in Singapore. It has been difficult everywhere else in the world as well. Equity levels are generally quite high. Rates outlook is stable. In some cases, it's been declining. So, investor confidence is clearly coming back. And at the same time, private capital providers have now a real need and an increasing need for recirculation of that capital, creating liquidity for their own LPs. And so, we really expect that the IPO market generally in the world is coming back, and we will benefit from that as well. We're working well as a team. Is the audio and the webcast coming through? Can you check with people on the webcast because it's cutting in and out in the studio? Any other questions?
Yeah, hi. Harsh Modi from J.P. Morgan.
A few questions. First, I just wanted to double-click on the IPO pipeline. Are these exclusive IPOs to Singapore, or are these guys looking at Hong Kong, New York, Bursa? As in, what I'm trying to understand is how likely that if, let's say, market, because markets are buoyant, right? SGX is the best performing market and so on and so forth. So, what is stopping these guys from actually making that call to jump in? And is it just exclusive to SGX, or are they looking at multiple options?
So, I guess it depends on which phase they are. For the group of issuers that have already put in their documentation with RegCo that they have clearly chosen to list here. Then there are people that are doing the work. They have hired advisors in Singapore. They have hired Singapore counsel and Singapore advisors.
We take that as a very good sign that they're really dedicated to work towards a listing in this market. And that's, to be honest, the bulk of the group, that's what we consider our pipeline. We don't consider our pipeline companies that are just thinking about a listing in the next three to five years. That is, I would say, the shadow pipeline. And the shadow pipeline is building up as well. One thing that we have seen in the last couple of years is that certainly the companies that we consider to be in our sweet spot, we've talked about this before, the companies starting with market caps from 200-300 million up to 300-500 billion, are increasingly convinced that at least a listing in Asia and this part of the world is the right thing for them to do.
Thank you for that. Any commonality in terms of sectors? Is it more new economy, old economy, or anything other than market cap, which you sense a trend?
A pretty broad base, and that's exciting. It's across sectors. More new economy than what we have seen. Again, that's probably also a low bar, but there's a very healthy group of new economy companies. That's also a reflection of just generally the type of companies that are now finally coming through in the region here. A number of the REITs are starting to look at the market, and that's frankly good quality issuance for us as well, sizable as well. Then a whole range in between in the consumer segment, some in the healthcare space, and these tend to be sectors that do well in this market as well and have proven track record. Great, thanks.
The other question is a bit broader for you, Loh Boon Chye. This high degree of confidence, as you said, on the medium term, 6%-8% revenue growth and fantastic numbers, 15% year-on-year growth and half on half. If there is a high degree of comfort on delivering even medium term, 6%-8%, is there still a need to retain capital for an organic? Because if I remember at the end of FY 2019, that entire move from whatever, 80%, SGD 0.20 happened because the exchange wanted to retain capital for an organic growth. Over the last five years, you have done phenomenally well in terms of organically building capabilities. So, does that strategy still make sense?
Is there some possibility that during the full year results on FY 2025, once you have the task force recommendations also out by then, there can be a holistic review on what kind of capital do you need to retain? Or do we start expecting maybe a stretch target, 10%-15% CAGR over the next five years rather than 6%-8%?
We guided the subject to earnings growth, a mid-single digit of CAGR growth in our dividend. That was about seven months ago at the start of our financial year 2025. Over medium term was six months into it. We continuously evaluate our capital needs. What's the best way to deploy or return them? We're just six months into the journey. We obviously, after that, guided ex-treasury income revenue growth, 6%-8%. I think increasingly our investors are also looking at us as a growth stock.
I wish more would look at it that way. So, I think we should look at it as a combination of dividend and share price change in terms of total shareholder return. But to your point, we evaluate what is needed. And I think we have done well equally organically growing and having some bolt-on acquisition. And the main aim is really to continue to grow the business, grow the company, serve the ecosystem well.
Great. And you have a max leverage target. Is there a minimum leverage target that you won't go below that level?
Well, I think you've seen us taking on leverage and growing our business. So, I'm not sure zero leverage is also a good boundary.
No, no, I agree. Zero leverage is not a good boundary. But is there, because we have been leverage has been coming down, so is there a number below which you would say, okay, you would start considering much higher payout because you're just accumulating too much capital? So, is there a lower bound on leverage as well?
Yeah, by combination of expectation of interest rates, what's the best use of our cash and the balance of that? Obviously, then we'll look at how we can maybe have a higher payout and what are the needs of the capital. What's the best use of the capital? And it will be a function of where we think interest rates may be. Because sometimes as we had a zero coupon, zero convertible, and now we obviously have a higher rate environment.
Right. And the final question from you, Boon Chye Loh.
If you think about the next, let's say, 12 - 18 months, and again, you have said it in the past, but what are the refreshed thoughts on if you had to look at inorganic opportunities, what kind of broad businesses or like geography that you would be looking at? Thank you.
First and foremost, our focus is on the organic growth. But as I said, if there are opportunities that can complement our businesses, we'll look at that. If that comes through, if it's just to scan around, most will be outside of Asia. Let's take one or two questions online.
Yes, so there's a question from Betty of CLSA. Could you elaborate more about upcoming product plans in the derivatives suite and the drivers for the strong OTC FX growth?
We'll take the second one first. Clearly, FX has been moving.
What's pretty interesting that you don't see in the breakdown there is that for the last maybe four to six quarters, a lot of the growth was driven by interest rate management using our platforms because we offer spot FX, as you know, but we also offer FX swaps. Right? So, in the past half year, that growth was actually driven much more by growth in actual FX management. And this is for logical reasons because heading into the China stimulus and to the election, there were big moves in expectations of the dollar, and there were big policy changes, for instance, in Rupee. It had been stable for a long time, and then it started moving.
This is very promising to us because when we look at our FX franchise, the OTC FX franchise, which covers the buy side and the sell side, that combined mix of needs to manage not just spot FX in Asia, but also interest rates through FX swaps gives us a great deal of confidence that that growth can continue. In terms of the derivatives franchise, I think there is no lack of interesting things we can list. What we do try to do very intentionally is listen to what the near-term and medium-term emerging needs of some of our customer base internationally are.
There are categories of product that we hope to talk more about, perhaps at the next briefing, where we have spent quite some time engineering something which works very well in our existing infrastructure, but also, I think, would constitute a new category of offering towards financialization. Very importantly, what we try to do, and Iron Ore is a great example, which is now that we've got a high degree of financialization, we also build around the clearing house. So, what do I mean by this? Because we've started being included in some investment indices, and we continue to work on the big indices, BCOM, GSCI, we've also started creating a concept known as traded reference. Because if you're an investor or you're an overnight trader, you want an exposure, but you don't really want to stay up all night doing the clicking.
So, what you'll say is, I'll send you an order that says, buy me 100 tons or something like that at whatever the relevant reference is tomorrow. And they believe that our reference is fair because the market is liquid. So, we'll build it. This is called Trade at Settlement. So, we rolled this out a couple of weeks ago. The adoption is strong. This goes hand in hand with indexation. In the equities world, you call it market on close or market on open. So, Trade at Settlement is a very important part of our further financialization of iron ore. This is particularly true of iron ore versus any other commodity because iron ore is backwar dated, meaning if I buy one year forward iron ore, it gives me positive returns just by rolling up the curve. This is not true of any other commodity.
They all tend to be contango. All these things together make us feel that actually we're very early in this journey of getting our derivatives engine, creating new features for further financialization. Other things we do around the engine is also we've published more reports. So, I don't think you guys track so closely, but we've started publishing something called the Aggregated Exposure Report. In the U.S., they call this a Commitment of Traders. But what's very, very important to our customers in the West, particularly institutional asset managers, manage money, is they track these reports very, very closely to understand who is managed money, what are their positions, who are physicals, what are their positions. So, there's a huge body of work that we're doing around the clearing house and the trading engine to make each product have more intense stickiness with the end customer.
One more question from Gurpreet, GS. What's the outlook for the half on half growth in iron ore DAV?
Well, I think if you look at our overall compounding platform, in particular iron ore and freight, we speak about capital efficiency many times. So, the cross-margining between the iron ore and freight, and we continue to see healthy growth momentum overall. In the iron ore note-up, there has been a less volatile market in the first half of 2025, but with greater cross-sell, in particular out of the West, and also the continued financialization interest from participants, I think we're on a trend basis to see a continued growth. Someone here? Yep. Jayden.
Hey, good morning. Jayden from Macquarie. Thanks for taking my questions. Just wondering on the FICC, the revenues that reported, I think a lot of the commentary is very bullish for what's happening in the FICC products.
But if you look half on half, the revenues were steady, and the growth rate was a little bit below what we saw for the equities derivatives line. So, just wondering if there was anything that was going on with fees or something else that was potentially impacting that. And just secondly, on the costs, I think the cost performance was great, and you've obviously lowered it to the lower end of the guidance. Anything that you were expecting to spend on that you haven't and any reason why that's changed? Those are my questions. Thank you.
No, I don't think you should read too much. It is a mix of the OTC FX, that's a platform business, versus the organic business. And clearly, the organic business in EQD and EQC, every dollar that we make drops much more to the bottom line because it's baked into the core infrastructure.
A little less true on platforms. But we saw no signs of weakness. I mean, even interest rates, believe it or not, Japanese interest rates, right? Second hike. We're now 20% of the market in short-term interest rate futures. And that's a category we haven't even started talking about. What is the future for interest rate derivatives in Asia? So, that's something we're starting to build out. And even this week, we're 30% market share of yen interest rates. So, there's a long way to go in the whole construct of FICC as applies to Asia.
Maybe I can add to that from a treasury income perspective. From a year-on-year perspective, we were comparable. But if you look at the mix, it was more skewed towards the equity derivative segment. So, from an FICC perspective, treasury income did drop a little bit.
And that's why I think you see the numbers from a half-and-half perspective a little bit less stellar. Because of the non-OTC FX, we obviously have margins in the other businesses. So, it's the treasury income split.
On your question on the expenses, Dan can complement, but we did have a lower headcount in the first half. This is a big replace, and they will come on board. And I think in our second half financial year, typically the seasonality of marketing and travel does pick up. So, those may be the two components in the second half of the year.
Okay, great. Thank you.
Any other question here? Maybe one more online?
There's no more questions online, Boon Chye.
Any other last question here? Okay. Thank you very much. Thanks for joining us this morning.