Singapore Exchange Ltd. (SGX) has opened an office in Hong Kong and launched a liquidity hub at HKEx’s data center, giving Hong Kong brokers direct electronic access to Singapore-based brokers linked to SGX.
The hub will cut the time taken to make trades from minutes to seconds, SGX said.
The launches are the first steps towards even closer collaboration between the two exchanges. The new office will be headed by Ringo Chiu, former chief information officer of Hong Kong’s Securities and Futures Commission.
SGX said the liquidity hub will offer clients in Hong Kong a cost-effective and convenient way to access the world’s biggest offshore market for Asian equity futures.
“There is a growing amount of commodities trading and clearing in the exchange. We have flagship products like iron ore futures and a significant portion of the customers are from China hedging their inventory need,” SGX sales and client chief Sutat Chew said.
Chew said the Greater China investors are looking for opportunities outside the market, not just Singapore, but also in the West, including the United States.
“Singapore is hoping to create a one-stop shop for futures so investors can manage their risks when they invest in countries such as Taiwan, Japan, Indonesia and India,” he said.
Five firms have signed up for SGX’s Hong Kong liquidity hub. They are CSC Futures (HK), Direct Access International Futures, Frontier Research and Technology Ltd, Kim Eng Futures (Hong Kong) Limited and Marigold International Securities.
The hub is a new step for Hong Kong Exchanges and Clearing Ltd. (00388.HK) but SGX has already established similar tie-ups with Australian Securities Exchange Ltd., Eurex Exchange and the London International Financial Futures and Options Exchange.
SGX said it also plans to forge closer ties with HKEx to develop yuan-related products. The push comes after SGX signed a memorandum of understanding with HKEx in December to promote offshore use of the currency.
“We aim to collaborate more with the Hong Kong stock exchange on renminbi products,” Chew said, adding that it will increase investment in Hong Kong.
“We are also going to expand products this year, including foreign exchange futures. Offshore yuan, the Chinese yuan, the Japanese yen and the Thai baht are part of the plan.”
SGX unit Singapore Exchange Derivatives Trading Ltd. has had approval to sell derivatives products in Hong Kong since September, with members including Haitong International Securities Group Ltd., Emperor Capital Group, Marigold and Quam Securities & Futures.
SGX will also follow in Hong Kong’s footsteps and introduce yuan futures this year, a move that Chew said “will encourage more investors to trade yuan products so that the pie will be bigger.”
He also said that HKEx’s planned cross-border trading link up with the Shanghai stock exchange in October might encourage investors to use SGX derivative products to hedge risks.
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