SGX hopes Shanghai-HK program will pave way for Singapore link

November 13, 2014 09:44
SGX's Sutat Chew says the Shanghai-Hong Kong Stock Connect program needs to be successful to lay the path for Singapore's own link with the mainland market.

Singapore stock exchange hopes the Shanghai-Hong Kong Stock Connect program will be successful and pave the way for Singapore's own linkage with the Shanghai bourse, an official said.

"We all know that no one will get any linkage with Shanghai without the Stock Connect between Hong Kong and Shanghai being successful; so we are keen to see it take off," Sutat Chew, head of sales and clients at Singapore Exchange Ltd. (SGX), told reporters in Hong Kong Wednesday.

The Stock Connect will fuel interest in accessing Chinese equities and help the internationalization of the A-share market, he said, adding that SGX is "open to cooperation" with the Shanghai bourse.

"We have links with different markets, so we are experienced in partnerships," Chew said.

More than 50 percent of SGX's turnover is accounted for by orders from outside Singapore, according to the exchange.

"We have data center connectivity now in Hong Kong and we will offer new securities products after receiving approval from Hong Kong SFC [Securities and Futures Commission] on the securities license," Chew added.

Ringo Chiu, chief representative of SGX Hong Kong office, said the exchange had filed an application for a securities license in April and that it is still under discussion with the SFC. Chui had earlier served as the chief information officer at Hong Kong's markets watchdog.

As the business in Hong Kong has grown, the exchange will move to a larger office next year. "We have seven staff now in Hong Kong, up from three people in July, so as to get closer to customers in the Greater China region," Chew said.

In September, SGX inked a Letter of Intent with the Taiwan Stock Exchange (TWSE) to study and work toward linkage with the Taiwan bourse.

"TWSE and SGX will look into a link which can provide members of each of the exchanges an efficient, cost-effective and direct way to trade, clear, settle and custodise stocks listed on the other exchange," the Taiwanese regulator said in a statement on Sept. 9.

Besides collaboration with different exchanges, SGX is also keen on launching yuan-denominated products. It started offering renminbi futures in both onshore and offshore yuan three weeks ago.

"We achieved 1 billion yuan (US$163 million) of trading just in day one, and in the three weeks, daily turnover amount in each day was three to four times of the trading in Hong Kong," Chew said.

"We have now an open interest of 3,000 to 4,000 contracts, which translated to 2.5 billion yuan in dollar term in just three weeks," he added.

For the FTSE China A50 Index Futures product, the exchange has about 250,000 contracts traded a day on average now, up from 100,000 contracts in June.

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Ayishah Ma is a financial reporter on Greater China issues.