The Singapore Exchange’s (SGX) derivatives trading arm has opened a new office in Hong Kong, while also launching a liquidity hub in its regional rival’s data centre.
SGX and Hong Kong Exchanges and Clearing (HKEx) are vying to become the main offshore centre for Chinese renminbi trading.
SGX’s move will see it positioned geographically closer to mainland China in hopes of securing continued success in its China A50 futures contract, which was traded 24 million times in the 12 months up to June 2014.
In the last five years, 15 brokers originating from Greater China have joined SGX as derivatives members, including six from Hong Kong.
“SGX-DT’s presence through our new office and liquidity hub offers market participants enhanced connectivity and market access to Asia's growth, thus complementing Hong Kong's capital markets and bringing the financial markets and participants of Hong Kong and Singapore closer together,” said Chew Sutat, head of sales and clients at SGX.
Five firms have already signed up to connect to SGX’s liquidity hub in Hong Kong.
HKEx chief executive, Charles Li, welcomed the exchange to the data centre and said they would continue to explore ways to cooperate in areas of common interest.
Despite posting similar derivatives volumes in recent years and having similarities within their contract offerings, the two exchanges appear to be working together to grow both their respective markets and the trading of derivatives contracts linked to mainland China.
A memorandum of understanding was signed by the exchanges in December 2013, with a view to build on areas of common interest including points of presence in each other’s data centres.