A new series of futures-based indices, SGX Access Asia Indices, to be released shortly by the Singapore Exchange (SGX) is targeted at structured product issuers who were looking for indices with higher liquidity, according to Simon Karaban, vice-president of market data and access at SGX.
Karaban told SRP that structured products providers’ demands for benchmarks with higher liquidity have resulted in the launch of a “one-stop product” that is customised to their needs.
“Clients will not need to acquire data from us and go to a calculating agent to build a new index,” said Karaban. “Apart from offering higher liquidity, the new indices are easy to hedge, have low tracking error and no counterparty risk.”
Karaban added that as the SGX Access Asia Indices strongly correlate and track the underlying cash market, they will provide a cost-efficient replication of this market.
SGX Access Asia Indices provide exposure to Asian markets including Japan, China, India and Taiwan, via underlying benchmarks such as the Nikkei225 index futures, China A50 index futures, CNX Nifty index futures, MSCI Taiwan index futures and MSCI Singapore index futures.
Although the new indices are still at development stage, Karaban said that they are likely to be rolled out in the near future if demand from the market continues.
According to SRP’s database, all equity-linked products marketed in Singapore’s retail market this year are structured deposits linked to baskets of shares issued by Standard Chartered.
However, FX-linked products are driving sales in the domestic market as investors seek underlyings with higher volatility that can provide higher coupons.
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