Asset Exposure into China, India Driving SGX Contracts to Record Highs

INR/USD futures contracts hit an all-time high this month, now capturing a 40 percent market share on SGX.

Singapore Exchange’s (SGX) trading volumes have built off last month’s momentum, scoring new all-time highs across key instruments. This saw continued interest in the SGX INR/USD futures contract, which has been the exchange’s most actively traded FX futures contract in 2017.

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Trading volumes had already been trending upward last month, following a strong performance in August. Earlier this month, SGX published a strong volumes report, which saw derivatives and futures trading both spike on renewed trading volatility.

Michael Syn, Head of Derivatives at SGX, commented on the volumes records: “We have seen a growing pool of market participants with multi-asset exposure to China and India, and subsequent increase in demand for tools to manage related currency risk.”

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This trading activity has also carried into this month with September 22 marking a new all-time high for its SGX INR/USD futures contracts. Totalling 108,417 contracts traded in a single day, the notional value translated to $3.34 billion. The emergence of this instrument is hardly surprising given that it has been the most actively traded FX futures contract at SGX for several months, having now reached an SGX market share of 40 percent.

The exchange also recorded a new record high in terms of its USD/CNH contracts this month, particularly on September 8, 2017 with 25,857 contracts traded. This corresponded to a total of $2.59 billion traded, solidifying SGX’s USD/CNH as the most traded listed offshore RMB futures contract globally.

“This FX volume growth is a validation of our cross-asset risk management strategy and our success in delivering margin offset efficiencies to users across the broad range of products we offer. We are particularly pleased to see a growing number of iron ore futures users hedging their FX exposures on our platform,” added Mr. Syn.

With markets in full swing, the outlook appears positive for both the INR/USD and USD/CNH moving forward – the former has seen its market share rise in each successive month.

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