SINGAPORE Exchange, Asia's second-biggest listed bourse, said its derivatives business could continue to grow at an annual pace of over 20 per cent as investors seek to profit from volatile markets.

'We expect more than 20 per cent growth,' Chief Executive Hsieh Fu Hua told the Reuters Global Exchanges and Trading Summit 2008 on Monday.

Mr Hsieh said that the expected growth rate was not an official forecast, but would be in line with global trends.

He said that the share of derivatives business, which accounts for almost a quarter of its revenue, would rise in the years ahead amid growth in existing products and the launch of new Asian derivative contracts.

He said the exchange plans to launch a new futures contract for Asian stocks, as well as single-stock derivatives for Singapore-listed firms in 2008. These new products will complement existing derivatives listed on the SGX such as futures on Japanese, Taiwanese, Singaporean and Indian stocks.

SGX, which bought a 5 per cent stake in the Bombay Stock Exchange in March last year, said a lack of clear rules would restrict mergers and acquisitions among Asian exchanges.

'Whether one can take stakes within Asia, I would say the opportunities are very few. Today I think it hardly exists,' Mr Hsieh said.

'India was an exception and I think Indians were way ahead than most exchanges in Asia today on being much more open.

'Until the climate changes in the region where such exchange of equity interest is welcomed, you are not going to see anything going on for a while,' he added.

When asked whether SGX was willing to return to shareholders part of its cash pile of over $600 million, he said this was unlikely.

'If you look at it in relation to banks, it's nothing,' he said. 'It's a relatively small cash pile, very small.'

SGX, which ranks behind Hong Kong Exchanges and Clearing in market value, needed part of the funds for regulatory capital and wanted to have money available to tap growth opportunities that may arise, he said.

SGX posted last month its smallest profit in four quarters as trading volumes slowed due to weakness in global markets.