SINGAPORE (Oct 21): Singapore Exchange Ltd said on Tuesday its net profit fell 16 percent in the fiscal first quarter, as low volatility and a penny stock crash weighed on its share trading volumes.

SGX posted a net profit of S$78 million ($61.4 million) for the three months ending September 30, down from S$92 million in the same period a year earlier. The result was just above the S$77 million average forecast of five analysts polled by Reuters.

"The outlook for both the domestic and global markets remains uncertain amid recent turbulence," the exchange's chief executive Magnus Bocker said in a statement. "Against this backdrop, the business environment is challenging".

Investor interest in the exchange's mid and small-cap market has yet to recover from last October's penny stock crash, when the bourse suspended trading in three interlinked companies after a plunge in their share prices wiped out billions of dollars in their combined market value.

That crash, along with low volatility reduced the average daily value of securities traded on the exchange during the quarter by 27 percent year-on-year to S$1 billion. That meant revenue at the securities business was down 29 percent to S$49.1 million.

The exchange has introduced several initiatives to try and improve volumes, including a cut to clearing fees and incentives for brokers to act as market makers, though traders say those moves are yet to make a noticeable impact on liquidity.

For now, the exchange is relying increasingly on its derivatives business, where revenue was up 4 percent from a year earlier to S$53.7 million. That was helped by a more than doubling in trading volumes for its China index futures business, with 10.8 million contracts traded in the quarter compared to 5.1 million a year ago.