SGX Launches New Index Series, Enabling Exposure to Key Emerging Markets

Given a shifting regulatory climate and the upcoming introduction of new margin requirements on uncleared derivatives on a global basis, Singapore Exchange (SGX) has opted to introduce a new instrument to its offering - a series of Asian emerging markets (EM) index futures. The index series will be the first of its kind in Asia, based on its unique calculations and exposure.

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In particular, the new series will be based on net total return (NTR) indices calculated by MSCI Inc. This is important as it will make SGX the only venue in Asia to effectively offer both price return and NTR versions of MSCI equity index futures via exposure to the new index series. As such, the new EM index futures will aim to provide a more broad-based Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term service for market participants looking for exposure to Asia’s four largest emerging markets of Taiwan, China, India, and Indonesia, which presently represent over 50% of the MSCI Emerging Markets NTR IndexSM.

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The EM index series will also help garner an exchange-listed solution to over-the-counter (OTC) equity index Swaps Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Swaps can be defined as a derivate contact composed of two parties that exchange to cash flow between two separate financial instruments.They are generally divided into two categories. This includes contingent claims (options) and forward claims, where forward contracts, swaps, and exchange-traded funds (ETFs) are exchanged. Commodity price, equity price, interest rate, and foreign exchange rate are common variables used as one of the cash flows in swaps upon initiation. Different Types of Swaps Read this Term in Asia. SGX’s new offering also represents a further bid to enable exposure into Asian markets. It has established itself as one of the region’s principal risk-management hubs. The new contracts themselves will include the follow index futures in each of the aforementioned EM economies:

• SGX MSCI Taiwan Net Total Return (USD) Index Futures
• SGX MSCI China Free Net Total Return (USD) Index Futures
• SGX MSCI India Net Total Return (USD) Index Futures
• SGX MSCI Indonesia Net Total Return (USD) Index Futures

According to Michael Syn, Head of Derivatives at SGX, in a statement on the new index series: “We continue to offer global investors unique offshore access to Asia, and these futures will provide a cost-efficient platform to trade and clear NTR index products. Today’s launch also highlights the growing importance of central-clearing counterparties in Asian markets.”

SGX recently reported its May volumes, which saw healthy growth across several key segments of its business as well as 2017 highs in terms of its FX trading. Its EM business has also seen strong increases in 2017, including the trading of its FTSE China A50 Index Futures, INR/USD and USD/CNH futures volume, providing a further impetus behind the new series offering.