Daily leverage certificates to list on SGX from July 17; new product for sophisticated retail investors

SINGAPORE -The Singapore Exchange (SGX) is offering a new investment product for sophisticated retail investors.

Called daily leverage certificates (DLCs), French bank Societe Generale will make 10 different DLCs available on SGX from July 17.

The certificate is an exchange traded financial product that offers fixed daily leveraged exposure to an underlying asset such as an index. Investors can "trade and capture enhanced returns, both up and down, on short term market moves", said the French bank on Monday (July 3).

The DLCs will officially start listing and trading on the SGX on July 17, and the underlying indices include MSCI Singapore and Hang Seng Index.

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The bank said in a statement: "Designed for sophisticated retail investors who trade actively, Societe Generale's DLCs allow investors to enhance their potential returns from the daily rise or fall of the underlying benchmark indices by multiplying the daily performance by a factor of three or five."

The leveraged exchange traded products are designed to be traded predominantly on an intra-day basis, and owing to a daily compounding effect, they are not designed to be held long-term, the bank stressed.

Investors need to be qualified in investing in specified investment products (SIP), to invest in DLCs.

It was reported in March that Hong Kong would allow retail investors to trade its Hang Seng indices via sophisticated exchange traded products.

The Financial Times had said: "The products are short-term trading tools and reset on a daily basis, a process that can incur higher transaction costs and detract from longer-term performance."

Societe Generale will provide real-time pricing of the DLCs on the SGX.

They can be bought and sold by investors at any time during SGX market hours, like a share, through a securities trading account with brokers.

Mr Keith Chan, head of cross asset listed distribution at Societe Generale's global markets in Asia Pacific, said: "Since its emergence in 2012, DLCs have become the fastest growing listed products by volume in Europe and we see strong appetite for leveraged products from Asian investors."