UPDATE 1-Singapore Exchange to speed up algo-trading system

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SINGAPORE May 20 (Reuters) - Singapore Exchange SGXL.SL, Asia's second-biggest listed bourse, said on Tuesday it will offer ultra-high speed trading access from August to investors in a bid to boost algorithmic trading for securities and derivatives.

SGX said in a presentation it currently takes 4 to 20 milliseconds for algorithmic traders to execute an order, but the new service -- in partnership with Singapore Telecommunications (STEL.SI) -- will take less than a millisecond.

"These are traders who would look at a very short-term orientated outlook," said Gan Seow Ann, SGX's head of markets.

SGX said the sub-millisecond access will be possible after it eliminated pre-execution limit checks, which take one to two milliseconds.

Algorithmic trading, or programmed trades, now make up 10 percent of SGX's securities trades and 15 percent of its derivatives segment.

Gan said the target was to match the percentage in volume seen in markets in the United States and Britain.

"They have very quickly moved up from very low levels to 35 to 40 percent of their volume," said Gan. "I think that would be a very nice target," he added, declining to specify a target date.

SGX said it will cost traders S$15,000 ($10,960) a month to access the higher speed service but said the cost includes what they pay for their existing systems at an estimated S$12,000.

A top SGX executive told Reuters earlier this month that its derivatives business could continue to grow at an annual pace of over 20 percent as investors seek to profit from volatile markets. [ID:nSIN138312] (Reporting by Yvonne Cheong; Editing by Neil Chatterjee)