SGX sets date for Indonesian futures

The Singapore Exchange will begin trading the first offshore Indonesian equity futures contract from 11 June.


The Singapore Exchange (SGX) will begin trading the first offshore Indonesian equity futures contract from 11 June.

The new contract is based on the MSCI Indonesia index, which SGX says is a popular Indonesian benchmark among institutional investors. The exchange has signed three market makers – Barclays, Credit Suisse and Optiver – for the provision of on-screen and off-screen liquidity.

Indonesia is garnering increased attention as an investment destination following a period of rapid growth. In Q1 2012, GDP growth in the country reached 6.3%. Domestic market capitalisation in Indonesia was US$385 billion at the end of last year, putting it on a par with Malaysia as the second largest market in the southeast Asian region behind Singapore.

“We are confident that the SGX MSCI Indonesia Index Futures provides a unique value proposition to regional and international investors from both portfolio and risk management perspectives,” said Michael Syn, head of derivatives at SGX.

“We believe there is great growth potential for these futures based on the Indonesian market given the strong demand for exposure to Indonesia and the need for a robust hedging instrument,” added Manuel Schlabbers, head of index and ETF trading, Asia, Credit Suisse.

Meanwhile, the derivatives segment of Bursa Malaysia has launched a new version of an options contract based on Malaysia’s composite index futures (FKLI) to provide traders with more hedging, arbitraging and trading choices.

The original contract, know as the OKLI, has been available on Bursa Malaysia since December 2000 and was the country’s first exchange-traded options contract, using the FBM KLCI cash index as its underlying instrument. The underlying instrument has been replaced with the FKLI to facilitate more efficient hedging with futures.

“In line with the growing sophistication of the local derivatives market, we are re-introducing the OKLI to capitalise on the significant growth of the equity index options market in Asia Pacific,” said Dato’ Tajuddin Atan, CEO of Bursa Malaysia and chairman of Bursa Malaysia Derivatives. “We expect increased volume from the new trading activities as options can be actively used to complement investments in the futures and the equity market.”