SINGAPORE, April 3 (UPI) -- The Singapore Exchange Ltd. on Wednesday announced plans for a series of Japanese-related initiatives, which include the launch of a Morgan Stanley Capital International (MSCI) Japan Index for futures on May 15.
The Singapore Exchange (ticker symbol: SGX) also will introduce Euroyen options on its Mutual Offset System (MOS) with the Chicago Mercantile Exchange (CME) later in the year.
To be traded on the SGX Electronic Trading System, the MSCI Japan Index futures will complement the floor-traded Nikkei 225 Index futures by providing new trading, hedging and arbitraging opportunities. The exchange said the introduction of the instrument will facilitate risk management for Japan equity investments that are benchmarked against the MSCI Japan Index.
The addition of Euroyen options will meet market demands for greater cost efficiency in using the instrument for round-the-clock trading and hedging, the exchange added. The MOS between SGX and CME is the world's first and most successful trading link for derivatives. It provides fully fungible trading and clearing of Eurodollar futures, Euroyen futures and Japanese government bond futures across the two time zones.
Last year the Singapore Exchange signed an agreement with the Tokyo Stock Exchange (TSE) to pursue a strategic alliance. Since then, it has announced the introduction of serial month contracts for Nikkei 225 Index futures and the launch of full-sized Japanese government bond futures.
In a separate news statement Wednesday, the exchange also announced the signing of an agreement with the Tokyo Commodity Exchange (TOCOM) to launch Middle East Crude Oil (MECO) futures on SGX.
"These initiatives are consistent with our strategy to grow our markets by meeting market participants' needs with relevant products and enhanced access," said SGX CEO Thomas Kloet.
"They are especially timely in the light of the recently signed agreement between Japan and Singapore for economic partnership, which will foster the growth of business, trading, arbitraging and risk management activities involving the two countries' markets," Kloet said.
The MECO futures contract on SGX will follow similar contract specifications as the very successful TOCOM MECO futures contract, except that it will be denominated in U.S. dollars per barrel instead of yen per kiloliter. SGX and TOCOM will work toward the fungibility of their respective contracts so as to deepen the contracts' liquidity and margin efficiency for their market participants.
Under the agreement, both exchanges will also explore the possibility of further cooperation in other products, the statement said.
"We believe that the liquidity in TOCOM's oil derivatives contracts, together with the participation of international oil refiners and traders based in Singapore and the Asia-Pacific region, will create the right synergies for our partnership," Kloet says.
