12 Hong Kong brokers trade futures on Singapore exchange

Two bourses agreed to cooperate in December 2013

PUBLISHED : Tuesday, 10 May, 2016, 8:14pm
UPDATED : Tuesday, 10 May, 2016, 8:14pm

A dozen Hong Kong brokers have joined Singapore Exchange (SGX) as futures trading members since its data centre tie-up with Hong Kong Exchanges and Clearing two years ago, SGX executive vice-president Chew Sutat said in Hong Kong on Tuesday.

“The link-up with the HKEX data centre since July 2014 has made it much faster and easier for investors in Hong Kong to trade SGX products,” he said.

The two bourses signed a memorandum of understanding on cooperation in December 2013 that led to the data centre tie-up.

The trading volume from Hong Kong investors has been high and similar to that from the US
Chew Sutat, SGX

Chew said the 12 Hong Kong brokers that had become remote members of SGX, including Quam, Bright Smart and Wing Fung, could trade Singapore futures products for Hong Kong investors directly. Quam can also trade equities listed in Singapore.

Besides the 12, Chew said there were many Hong Kong brokers which were not members of SGX but who traded through other members of the bourse.

“The trading volume from Hong Kong investors has been high and similar to that from the US,” Chew said.

SGX launched yuan futures early last year and Chew said China-related products were popular.

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The yuan became more volatile after Beijing devalued the currency by 2 per cent in August last year, and SGX’s USD/CNH futures, which traders can use to hedge their risks in the offshore yuan market, reported trading volume of 25,651 contracts in April, up 9 per cent from March and up 327 per cent year on year.

SGX’s A-shares futures products have also popular, with more international investors can trading A shares in Shanghai via the stock connect scheme between Hong Kong and Shanghai that was launched in November 2014.

Chew said while both Singapore and Hong Kong had yuan futures and A-share derivative products, he did not consider the two bourses rivals.

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“While we are both offering similar products, there are also a lot of differences in the structures of the products,” he said. “The hedging demand is so huge that there is room for both exchanges to offer these products and to provide arbitrage opportunities for investors to trade between the two markets.”

Chew said that besides futures products, SGX also had some stocks that could be attractive to Hong Kong investors, including health care, real estate and consumer stocks.

Hong Kong Securities Association chairman Benny Mau said Singapore’s stock market was smaller than the Hong Kong’s because more big mainland players had listed here.

“However, SGX is more flexible in the approval of derivatives products, which has attracted many Hong Kong and international investors to trade in its futures market,” Mau said. “This is something HKEX would need to catch up on.”