Singapore: Singapore Exchange (SGX) on Wednesday said it will add Asian foreign exchange (FX) futures, including Indian rupee/US dollar contract, to its derivatives market in the third quarter of 2013.
The proposed FX futures would be subject to regulatory approval, SGX said in a statement.
The FX futures suite will include deliverable and non- deliverable Asian currencies cleared in currencies such as the US dollar, Japanese yen and Singapore dollar.
SGX would initially offer four currency pairs: the Australian dollar/US dollar, Australian dollar/Japanese yen, Indian rupee/US dollar and US dollar/Singapore dollar.
SGX said the introduction of FX futures for trading and clearing was in response to strong client demand for currency management tools to complement its suite of highly liquid Asian equity derivatives.
SGX was the world's largest offshore market for Asian equity derivatives with a record USD 5 trillion notional of contracts traded in 2012, the statement said.
SGX also clears non-deliverable FX forwards in seven Asian currencies.
Anchored in AAA-rated Singapore, the Asia's leading hub for foreign exchange, SGX said its award-winning derivatives market enjoyed over 100 percent growth in open interest in 2012 as international customers continued to leverage SGX's position as the leading Asian clearing counter party meeting the highest international standards.
"The Asian forward currency markets continue to grow strongly alongside trade and capital flows. Price discovery naturally happens in our time zone where the relevant policy makers, central banks and capital market stakeholders are located," SGX Chief Executive Magnus Bocker said.
"As Asian capital markets increase their share of global investments, investors can seek to manage Asian currency risk as specific sources of out-performance," he said.
"SGX's proposed suite of Asian FX futures offers customers a transparent, robust and margin-efficient platform for Asian currency risk management, and further cements Singapore's lead as the price discovery centre for Asian foreign exchange," he said.
Meanwhile, the SGX has signed a licensing agreement with global index provider MSCI for 14 new regional and country indices. With this, SGX has licensed a total of 19 MSCI indices, encompassing almost all of Asia's key capital and other growth markets.
The 14 additional indices are components of broader regional indices like the MSCI Emerging Markets Index, covering Thailand, the Philippines and other country markets, and the MSCI Frontier Markets Index.
The expanded suite of SGX products based on MSCI indices
would provide global investors with extensive reach into Asian emerging markets, and complements SGX's existing equity derivatives suite such as SGX MSCI Singapore, SGX MSCI Taiwan, SGX Nikkei 225 (Japan), SGX FTSE China A50 and SGX CNX Nifty (India).
As the Asian Gateway, SGX would provide investors with single-country access to about 90 percent of the MSCI AC Asia Index by market capitalisation.
"The pipeline of new products is aligned to our global customer's interest and needs.
SGX's customers can look forward to a new and more comprehensive selection of hedging and trading opportunities including new country exposures," said Mr Michael Syn, Head of Derivatives, SGX.
"We are pleased with this extended MSCI cooperation, as it is core to SGX's proposition as an Asian gateway and one-stop risk management platform," he said.
"We view SGX as a key exchange in Asia, and we are delighted to extend our close working relationship with them," said Mr Baer Pettit, Managing Director and Global Head of the MSCI Index Business.
"This latest agreement gives SGX clients expanded access to key markets in the region and reflects the widespread use of MSCI indices as benchmarks for the Asian market by institutional investors globally," said Pettit.
First Published: Wednesday, March 13, 2013, 12:34