Singapore Exchange (SGX) is adding Asian foreign exchange (FX) futures to its derivatives market in the third quarter of 2013, subject to regulatory approval. The introduction of FX futures for trading and clearing is SGX’s response to strong client demand for currency management tools to complement its suite of highly liquid Asian equity derivatives.
The proposed 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 will initially offer four currency pairs: the Australian dollar/US dollar, Australian dollar/Japanese yen, Indian rupee/US dollar and US dollar/Singapore dollar.
SGX is consulting the public on its first four proposed foreign exchange (FX) futures contracts.
These cash-settled FX futures contracts will be traded on and cleared by SGX.
SGX seeks the views of the public and market participants on the following proposals:
- Position Limits – The position limit for each FX futures contract will be 10,000 contracts net on the same side of the market and in all contract months combined.
- Price Limits – In line with the underlying over-the-counter FX markets and the practices of other exchanges, these contracts will have no price limits unless SGX prescribes them. This allows free price movements in response to market developments and information.
- Termination of trading – The last trading day for the FX futures contracts will be two business days prior to the third Wednesday of the contract expiry month, except for the Indian rupee/US dollar futures. For Indian rupee/US dollar futures, the last trading day will be two business days prior to the last business day of the contract expiry month.
- Final Settlement Price – The suite of FX futures contracts will be settled in cash based on proven and widely-accepted methodology.
SGX targets to introduce the new suite of FX futures contracts in the third quarter of 2013.
The consultation paper is available on SGX’s website at www.sgx.com from today. Market participants and members of the public can submit their comments and suggestions from today until 16 April 2013 via email to rules@sgx.com.