Singapore Exchange (SGX)

SGX to get boost from Shanghai-HK trading link, says Deutsche Bank

SINGAPORE (Nov 20): The newly launched trading link between Shanghai and Hong Kong is a "positive catalyst" for the Singapore Exchange and could account for almost 9% of its FY2015 revenue, says Deutsche Bank.

The Shanghai-Hong Kong Stock Connect programme will especially benefit SGX's derivatives business, the key driver of the bourse operator's top line growth in recent quarters, according to Deutsche Bank analysts Sukrit Khatri and Tracy Yu.

Trading in China A50 futures contracts, in particular, will get a boost, they said in a note.
...
http://www.theedgemarkets.com/sg/article...tsche-bank

The SGX's derivative team is working very hard...

Singapore Exchange to launch petrochemical derivatives

SINGAPORE (Nov 21): The Singapore Exchange said on Friday it will launch five petrochemical swaps and
futures in the next two months to meet rising demand for risk management in the industry.

The exchange will start swaps and futures contracts for paraxylene (PX) delivered to China on Dec 2 and another four polyolefins contracts on Jan 19, it said in a statement.

The polyolefins contracts are for linear low density polyethylene (LLDPE) and for polypropylene (PP) flat yarn delivered to China and Southeast Asia, SGX said.

"Given the volatile nature of the market, these new swaps and futures contracts aim to provide a more effective hedging instrument for petrochemical industry participants in the Asia PX, PP and PE physical markets," the exchange said.

The PX, PP and polyethylene (PE) markets are estimated to have grown to 45 million tonnes, 23 million tonnes and 35 million tonnes, respectively, with China consuming the most, SGX added.

ICIS will be the index provider for the polyolefin contracts, SGX said, while the PX contract will be cash settled against the Platts index.
http://www.theedgemarkets.com/sg/article...erivatives

Indeed but it does not affect most men on the streets and stockbrokers...

(21-11-2014, 03:00 PM)CityFarmer Wrote: The SGX's derivative team is working very hard...

Singapore Exchange to launch petrochemical derivatives

SINGAPORE (Nov 21): The Singapore Exchange said on Friday it will launch five petrochemical swaps and
futures in the next two months to meet rising demand for risk management in the industry.

The exchange will start swaps and futures contracts for paraxylene (PX) delivered to China on Dec 2 and another four polyolefins contracts on Jan 19, it said in a statement.

The polyolefins contracts are for linear low density polyethylene (LLDPE) and for polypropylene (PP) flat yarn delivered to China and Southeast Asia, SGX said.

"Given the volatile nature of the market, these new swaps and futures contracts aim to provide a more effective hedging instrument for petrochemical industry participants in the Asia PX, PP and PE physical markets," the exchange said.

The PX, PP and polyethylene (PE) markets are estimated to have grown to 45 million tonnes, 23 million tonnes and 35 million tonnes, respectively, with China consuming the most, SGX added.

ICIS will be the index provider for the polyolefin contracts, SGX said, while the PX contract will be cash settled against the Platts index.
http://www.theedgemarkets.com/sg/article...erivatives

SGX announces launch of bond trading platform

Singapore Exchange (SGX) today announced its intention to launch a bond trading platform by mid-2015. It will
initially trade Asian corporate bonds in G3 currencies, with Asian local currencies to follow. To drive this initiative,
the first of its kind focused on Asian bonds, SGX has formed a new subsidiary, SGX Bond Trading (“SGX BT”).
The development of this platform will be executed in close consultation with the industry, and the platform aims
to become an Asian Liquidity Centre for both high-yield and investment-grade corporate bonds. SGX held an
inaugural Steering Committee meeting with senior representatives of 32 leading Asian fixed income dealers and
investors yesterday and will continue to do this at periodic intervals leading to the launch of the platform. The
Steering Committee will provide strategic direction and feedback to SGX on the development and refinement of
services provided by SGX Bond Trading to address the needs of Asian bond market participants

http://infopub.sgx.com/Apps?A=COW_CorpAn...HZ6_zGUc70

Is SGX the counter party behind these derivatives?

Somehow this reminds me of AIG's credit default swap during GFC. When time was good and everything was rosy, they were just collecting whatever premium paid for these CDS. But when the tide turned, huge payout and writedown ensued.

Obviously, I'm lacking the knowledge (and crystal ball) to discern which one is the case here. Just write what pop-up to my mind while reading the news...

(21-11-2014, 03:00 PM)CityFarmer Wrote: The SGX's derivative team is working very hard...

Singapore Exchange to launch petrochemical derivatives

SINGAPORE (Nov 21): The Singapore Exchange said on Friday it will launch five petrochemical swaps and
futures in the next two months to meet rising demand for risk management in the industry.

The exchange will start swaps and futures contracts for paraxylene (PX) delivered to China on Dec 2 and another four polyolefins contracts on Jan 19, it said in a statement.

The polyolefins contracts are for linear low density polyethylene (LLDPE) and for polypropylene (PP) flat yarn delivered to China and Southeast Asia, SGX said.

"Given the volatile nature of the market, these new swaps and futures contracts aim to provide a more effective hedging instrument for petrochemical industry participants in the Asia PX, PP and PE physical markets," the exchange said.

The PX, PP and polyethylene (PE) markets are estimated to have grown to 45 million tonnes, 23 million tonnes and 35 million tonnes, respectively, with China consuming the most, SGX added.

ICIS will be the index provider for the polyolefin contracts, SGX said, while the PX contract will be cash settled against the Platts index.
http://www.theedgemarkets.com/sg/article...erivatives

(26-11-2014, 08:51 PM)CityFarmer Wrote: SGX announces launch of bond trading platform

Electronic bond trading sounded foreign to me. Did some brief read-up on it and it seems like the main driving forces for doing so are generally to improve liquidity as the Big Boy banks are scaling back with tougher regulations. GG might have a theory that the end game is near with this trading platform the ultimate bait box for unsuspecting retail meat. In addition, there also seems to be multiple challenges involved in going electronic (eg. bond traders value anonymity alot).

Well, i remember SGX started Chi-East, a dark pool operator when dark pools looked like they were going to conquer the world...well, it didn't really worked out...Nonetheless, a good try though and it might have an advantage as first-mover for Asian bonds (maybe it might just work out like what the derivative supermarket business is doing)

(26-11-2014, 10:42 PM)ahyu02 Wrote: Is SGX the counter party behind these derivatives?

Somehow this reminds me of AIG's credit default swap during GFC. When time was good and everything was rosy, they were just collecting whatever premium paid for these CDS. But when the tide turned, huge payout and writedown ensued.

Obviously, I'm lacking the knowledge (and crystal ball) to discern which one is the case here. Just write what pop-up to my mind while reading the news...

SGX operates a clearing house, so i don't think they are the counterparty themselves. A clearing house does help to reduce counterparty risks. The CDS (credit default swaps) created by AIG were basically like insurance, and is a tad more exotic than the plain vanilla futures/options i reckon.

(27-11-2014, 12:39 AM)weijian Wrote:

(26-11-2014, 10:42 PM)ahyu02 Wrote: Is SGX the counter party behind these derivatives?

Somehow this reminds me of AIG's credit default swap during GFC. When time was good and everything was rosy, they were just collecting whatever premium paid for these CDS. But when the tide turned, huge payout and writedown ensued.

Obviously, I'm lacking the knowledge (and crystal ball) to discern which one is the case here. Just write what pop-up to my mind while reading the news...

SGX operates a clearing house, so i don't think they are the counterparty themselves. A clearing house does help to reduce counterparty risks. The CDS (credit default swaps) created by AIG were basically like insurance, and is a tad more exotic than the plain vanilla futures/options i reckon.

I concur with weijian. It works the same as equity market. SGX does the clearing and charging a fee, instead as a counter-party's PnL. It is very different from CDS deals of AIG.

(27-11-2014, 12:31 AM)weijian Wrote:

(26-11-2014, 08:51 PM)CityFarmer Wrote: SGX announces launch of bond trading platform

Electronic bond trading sounded foreign to me. Did some brief read-up on it and it seems like the main driving forces for doing so are generally to improve liquidity as the Big Boy banks are scaling back with tougher regulations. GG might have a theory that the end game is near with this trading platform the ultimate bait box for unsuspecting retail meat. In addition, there also seems to be multiple challenges involved in going electronic (eg. bond traders value anonymity alot).

Well, i remember SGX started Chi-East, a dark pool operator when dark pools looked like they were going to conquer the world...well, it didn't really worked out...Nonetheless, a good try though and it might have an advantage as first-mover for Asian bonds (maybe it might just work out like what the derivative supermarket business is doing)

The Chi-East venture is a good trial albeit didn't work out at the end. It didn't cost much for the trial, IIRC.

The traditional bond market liquidity was supported by Private Banker, and "Big Boy banks" as highlighted. With more regulations on the banks, the liquidity is a impending issue for bond holders.

I am not sure, but I reckon the platform is for institutional, excludes retail investors, which works similar as the dark-pool. It will improve the liquidity of the bonds in this region, which seems meeting the impending market demands.

(27-11-2014, 08:58 AM)CityFarmer Wrote:

(27-11-2014, 12:39 AM)weijian Wrote:

(26-11-2014, 10:42 PM)ahyu02 Wrote: Is SGX the counter party behind these derivatives?

Somehow this reminds me of AIG's credit default swap during GFC. When time was good and everything was rosy, they were just collecting whatever premium paid for these CDS. But when the tide turned, huge payout and writedown ensued.

Obviously, I'm lacking the knowledge (and crystal ball) to discern which one is the case here. Just write what pop-up to my mind while reading the news...

SGX operates a clearing house, so i don't think they are the counterparty themselves. A clearing house does help to reduce counterparty risks. The CDS (credit default swaps) created by AIG were basically like insurance, and is a tad more exotic than the plain vanilla futures/options i reckon.

I concur with weijian. It works the same as equity market. SGX does the clearing and charging a fee, instead as a counter-party's PnL. It is very different from CDS deals of AIG.

Yea SGX only makes sure the trades settle as a clearing house, not the counterparty

But there is certain counterparty risk in derivatives because it is on margin. IIRC there now exist an exchange fund for that purpose. ahyu you can read up on Barings Nick Leeson case for more understanding of the mechanism involved and safeguards.

IMHO what is more contentious is the CLOB issue because SGX was clearing trades that Malaysia claimed to be quasi-"illegal" to set up an offshore bourse. When CLOB collapsed SGX denied any responsibility. The devil as always is in the detail

That said, most people ignore counterparty risk most of the time when they make a transaction. IMHO counterparty risk is the largest risk for an investor, from Gold scams to fraudulent S-chips to even CDO. Even regulators ignore it until crap hits the fan and it's too late to unwind orderly... part of the reason why Buffett said derivatives are WMD