According to Singapore Exchange, today's launch of exchange trading of Singapore government bonds (SGS bonds) will improve price transparency and liquidity, while providing investors with “both capital protection and steady returns”.
Investors can now access SGS bond prices on SGX's website or through their brokers and trade SGS bonds through their brokers in the same way as equities. Previously, investors could only buy and/or sell SGS bonds through dealer banks.
A total of 19 SGS bond issues with maturities of two years or more totalling S$74billion will be available.
SGX's fixed income market currently comprises corporate bonds and preference shares, including some approved for investment using Central Provident Fund and Supplementary Retirement Scheme pension savings.
SGS bonds must be held by SGX's Central Depository (CDP) as custodian before they can be traded.
“Trading of SGS bonds on SGX will make the price discovery process more efficient and transparent, thereby reducing trading cost for investors. Market makers will also be present, increasing liquidity and making it easier for individual investors to buy and/or sell SGS bonds at any time during the trading day,” said Tng Kwee Lian, head of fixed income at SGX.