Singapore Exchange (SGX) on Monday said it has launched net total return and price return futures on the MSCI Emerging Markets (EM) and MSCI EM Asia indices, making it the first and only exchange in Asia to offer investors exposure to these fast-growing market segments.
Asia is the dominant risk and investment factor to the EM basket, with over 70 percent capital weightage of the index.
The introduction of these new futures contracts is the next stage of evolution in SGX's comprehensive portfolio of Asian country-specific equity and currency indices, SGX said in a statement.
"The move to introduce these new MSCI products will address the growing demand from global investors for increased capital efficiency when trading across different Asian equity and FX derivatives products on SGX," said Gregoire Thomas, Managing Director, Delta One Asia Pacific Trading, Bank of America Merrill Lynch in a statement.
According to the International Monetary Fund, year-to-date purchases of EM stocks and bonds to August more than doubled the total for 2015 and 2016, and with the projected per capital GDP growth in EM and developing economies of 3.7 percent between 2017 and 2022, compared to 1.4 percent for advanced economies, these capital and portfolio flows are expected to grow.
SGX offers cross margining with existing equity and FX derivatives, a centrally cleared trading solution which is of growing value with the upcoming implementation of new margin requirements for uncleared derivatives, and the flexibility for both liquid screen and block trading.