SGX plans a series of Japan derivatives initiatives

The Singapore Exchange (SGX) plans to bolster its focus on Japan with a series of new products due to be launched in the next few months.

SGX will launch MSCI Japan index futures contracts to be traded on its electronic trading system (ETS) on May 15. The contracts are expected to act as a risk management tool for Japan equity investments benchmarked against the MSCI Japan index.

The exchange also plans to offer euro-yen options via its derivatives trading link with the Chicago Mercantile Exchange (CME) - a service called Mutual Offset System (MOS).

Currently, MOS only provides fully fungible trading and clearing of euro-dollar futures, euro-yen futures and Japanese government bond (JGB) futures across the two time-zones, the exchange said.

SGX will also introduce full-sized SGX 10-year JGB futures and options contracts with a notional value of ¥100 million on April 18. Trading of full-sized SGX JGB contracts will run concurrently with the existing SGX JGB contracts that are one-tenth the size. SGX will rename the smaller contracts 'mini JGB'.

The exchange will offer a fungibility facility with a position and margin offset mechanism to enable traders to offset their positions between full-sized SGX JGB contracts and opposite positions in SGX mini JGB contracts.

SGX has also signed an agreement with the Tokyo Commodity Exchange (Tocom) to co-operate on the launch of Middle Eastern crude oil (Meco) futures on the Singapore exchange. Meco futures will be denominated in US$/barrel, unlike Tocom Meco futures which are denominated in ¥/kilolitre. Both exchanges plan to explore the possibility of further co-operation in other products and joint development of new risk management tools.