Singapore Exchange Limited (SGX) announced today that it is embarking on three initiatives to develop its options market. These are: 1) enhancing the existing SGX Nikkei 225 Index Options and SGX MSCI Taiwan Index Options contracts; 2) launching the SGX MSCI Singapore Index Options contract; and 3) introducing a web-based electronic trade registration system named “eNLT” (Electronic Negotiated Large Trades). These initiatives will be implemented on 6 April 2009.
In today’s volatile market environment, options contracts are essential tools for market participants to express a view on, or hedge their exposure to, the underlying markets. In response to feedback from customers, the Exchange is enhancing the contract specifications of the SGX Nikkei 225 Index Options and the SGX MSCI Taiwan Index Options by increasing the number of tradable strikes and contract months to cover a tenure of up to three years.
The Exchange will also launch the SGX MSCI Singapore Index Options to complement the MSCI Singapore Index Futures, which was launched in September 1998. With current average daily trading volume above 15,000 contracts, the MSCI Singapore Index Futures is a liquid contract traded by the professional investment community. The introduction of the SGX MSCI Singapore Index Options contract will further enhance its market depth.
To support the registration of negotiated large trades including options, SGX is introducing the web-based eNLT system for members and customers. The new system will allow contracts with finer tick sizes to be registered and cleared. This offers market participants, including over-the-counter (OTC) players, greater flexibility to register trades on SGX and to take advantage of the regulated central counterparty clearing platform.
“Our enhanced options suite and eNLT facility are part of our longer term efforts to develop the options market. We believe that the options contracts will complement our current futures offerings, and can eventually become a major growth driver of our derivatives market,” said Janice Kan, SGX vice president & head of Product Development.