SINGAPORE - Singapore Exchange (SGX) announced on Tuesday (July 10) that it aims to launch SGX FlexC FX Futures on Aug 27, 2018.
The new feature will allow over-the-counter (OTC) bilateral trades with tailored expiration dates to be registered and cleared like standard SGX FX futures contracts, the stock exchange said. It will be available for INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
FX (foreign exchange) markets are moving towards central clearing, and this feature is a way to enhance operational efficiencies, lower costs and counterparty credit risk, and keep bilateral trading relationships, the SGX said.
"Access to counterparty credit, especially for tenors longer than spot, is increasingly scarce and expensive in the OTC FX markets," said SGX head of derivatives Michael Syn.
"FlexC FX offers futurised client-clearing, bringing the surety of SGX's market-leading central counterparty clearing house (CCP) to existing bilateral credit relationships, and expanding opportunities for improved Asian FX price discovery and risk management workflow."
The SGX is working with firms such as BidFX and TFS Derivatives HK Ltd on the initiative. TFS Derivatives HK managing director Wessel van der Scheer said that the independent structuring house will operate its platform TradMatch and act as an independent intermediary, with institutional block-size participants providing liquidity.
Singapore is the biggest FX centre in Asia and the third-largest globally after London and New York, with FX futures on the SGX recording a cumulative notional volume of US$385 billion from January to June 2018, up 132 per cent year-on-year.
Trading volume of SGX USD/CNH futures in the same period reached US$194 billion, exceeding the US$190 billion volume traded in the whole of 2017.