Singapore Exchange (SGX) has launched futures and options contracts on the MSCI China Free Index. The contracts are USD denominated and track the MSCI China Free Index, which comprises large and mid-cap companies listed outside of mainland China.
The MSCI China Free Index has a broad representation of sectors including financial, information technology and consumer companies. The SGX MSCI China contracts are targeted at international investors as risk management, price discovery and benchmarking tools linked to the key sectors that are driving China's economic growth, but with a focus on US investors as the SGX MSCI China contracts have also been certified by the Commodity Futures Trading Commission (CFTC), enabling US investors to directly trade them from within the US.
The MSCI China Free Index was recently adjusted to include US listed Chinese securities in a move to make it more representative of the breadth of the China equity markets.
Michael Syn, head of derivatives at SGX, said in a statement that the new contracts respond to a growing need for broader tools that reflect China's economy today. "The CFTC certification of the contracts will enable us to meet US investor demand for access to China's growth opportunity, and further expand our international network," said Syn.
The exchange also reported a 3% increase in revenues to $206m year on year, and a net profit of $89m year to date, according to its quarterly performance report.
Derivatives revenue at the exchange increased 3% or $2.5m to $82.2m, and accounted for 40% of total revenue. Revenues from equity and commodities were $61.9m, up 3% from $60.1m on the back of higher trading volumes in the SGX FTSE China A50 Index futures, Japan Nikkei 225 and iron ore contracts.
In the equities and fixed income segment which comprises the exchange's issuer services, securities trading & clearing and post trade services, the SGX reported a 5% fall in revenue to $18.7m ($19.7m), in issuer services.
Listing revenue was $11.4m, down 6% from $12.1m due to a decline in the number of new bond listings. There were a total of four new equity listings, compared to two a year earlier. Securities trading and clearing revenue increased $2m or 4% to $54.8m ($52.8m) and accounted for 27% of total revenue.
The increase was attributed to revenue growth in securities clearing with $42.2m, up 3% from $41m and access with $10.3m, up 5% from $9.9m, as well as a 17% increase of revenue from $2m to $2.3m from collateral management, membership and others.
The higher level of market activities this quarter led to an increase in the securities daily average traded value (SDAV) by 5% to $1.22bn and total traded value also by 5% to $74.7bn. Post Trade Services revenue increased by 10% to $28.5m, accounting for 14% of total revenue; while securities settlement revenue was up by 10% to $22.1m, following higher volumes of institutional securities settlement.
Revenues from collateral management, licence, membership and others contributed $20.4m, up 4% from $19.6m. Average month-end open interest for equity and commodities derivatives was 3.7 million contracts, up 14% from 3.3 million contracts a year earlier.
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