The Singapore Exchange (SGX) has reported a threefold increase in the number of FTSE China A50 index futures contracts traded in the last 12 months – a rise reflecting the desire of international investors to gain access to China.
Direct access to China’s securities markets is heavily restricted for foreign investors. Firms wishing to invest must obtain qualified foreign institutional investor (QFII) status from the Chinese authorities. Such status is based on strict criteria and a quota system, with relatively few licences granted in recent years. SGX's futures offering has been billed as a convenient alternative to direct investment in the burgeoning market.
The volume of FTSE China A50 index futures traded on SGX increased to 661,587 contracts in March, following SGX’s receipt in February of the necessary approval from US regulator the Securities and Exchange Commission (SEC) to allow SGX FTSE China A50 index futures contracts to be offered and sold in the United States. This meant for the first time, US investors could trade the contract through a US-based broker.
The Singapore Exchange also experienced increased volumes in instruments providing access to other Asian markets – MSCI Taiwan futures trading increased 9% year-on-year to 1.6 million contracts and S&P Nifty futures volume also increased 9% to 1.3 million contracts.
Overall, SGX derivatives average daily volume increased 9% to 353,683 contracts compared with February.