Societe Generale and the Singapore Exchange have teamed up again to introduce a range of high leverage daily leverage certificates (DLCs) with a seven leverage factor on the Singapore exchange. The launch follows the first batch of DLCs launched on July 17, 2017, which generated total turnover of S$1.6bn in less than six months.
The new products include long and short DLCs offering a fixed leverage of up to seven times the daily returns of three underlying indices: MSCI Singapore, Hang Seng and Hang Seng China Enterprises, adding to the existing range of DLCs listed by SGoffering three- and five-times daily leverage on the same indices.
DLCs are an 'effective investment vehicle of growing popularity for investors looking to capture short term market opportunities', according to Keith Chan (pictured), head of cross-asset listed distribution at SG's Global Markets in Asia Pacific. The French bank 'is expanding its DLC product range in Singapore together with the SGX to further meet the growing demand we've seen from Asia,' said Chan, in a statement. 'We are encouraged to hear the positive feedback on our market-making quality, especially the tight bid-ask spread we have maintained, from traders who have been trading our DLCs since the launch.'
DLCs have been one of the fastest developing listed structured products in Europe since 2012, with SG having more than 600 DLC products listed across nine countries in Europe and covering multiple asset classes including major indices, single stocks, foreign exchanges and commodities, according to Luuk Strijers, head of products, equities and fixed income at SGX.
The first batch of 10 DLCs launched by SG in Singapore six months ago, achieving S$14m of average daily turnover, which compares with the S$58m of average daily turnover of all structured warrants traded on exchange in the full year of 2017. These 10 DLCs are still the only leverage products available on the exchange and in Asia. The new seven-times DLCs, which will begin trading on on January 24, 2018, have a 10% 'air bag' mechanism, which protects investors in extreme market conditions, limiting the risk of capital loss on the initial investment.
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