SGX to Launch Custom FX Futures in Conjunction with FinTech Partners
- The exchange operator claims that SGX FlexC FX Futures will reduce credit risk and lower trading costs
Singapore Exchange (SGX) announced on Wednesday that it has launched a new FX futures solution. SGX FlexC FX Futures will enable investors to trade custom FX futures, as though they were over-the-counter contracts, and clear those trades on the SGX platform.
SGX aims to launch the new service in late August having developed it in conjunction with a number of market participants. Traders will be able to negotiate deals privately, but expiration dates are registered and cleared like a regular SGX FX futures contract.
According to SGX’s statement, the futures contracts will, at least initially, only be available in a small number of currency pairs. When the service launches, investors will be able to trade in INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
Regulatory Pressures
The stock exchange operator claims that the new service is necessary as a result of changing industry dynamics. It claims that regulatory pressures since the 2008 financial crisis have pushed the derivatives market, and that includes FX futures and OTC products, towards central clearing houses.
SGX claims that SGX FlexC will streamline any regulatory requirements that firms must adhere to. On top of this, the exchange operator claims it will reduce counterparty credit risk and lower costs.
As noted, a number of firms worked alongside SGX when developing the new service. Today’s statement suggests that BidFX, TradAir and TFS Derivatives HK, all technology providers to the institutional FX industry, supported SGX in its efforts.
Michael Syn, Head of Derivatives, SGX said: “FlexC FX offers futurised client-clearing, bringing the surety of SGX’s market-leading central counterparty Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term (CCP) to existing bilateral credit relationships, and expanding opportunities for improved Asian FX price discovery and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term workflow.”
Singapore Exchange (SGX) announced on Wednesday that it has launched a new FX futures solution. SGX FlexC FX Futures will enable investors to trade custom FX futures, as though they were over-the-counter contracts, and clear those trades on the SGX platform.
SGX aims to launch the new service in late August having developed it in conjunction with a number of market participants. Traders will be able to negotiate deals privately, but expiration dates are registered and cleared like a regular SGX FX futures contract.
According to SGX’s statement, the futures contracts will, at least initially, only be available in a small number of currency pairs. When the service launches, investors will be able to trade in INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
Regulatory Pressures
The stock exchange operator claims that the new service is necessary as a result of changing industry dynamics. It claims that regulatory pressures since the 2008 financial crisis have pushed the derivatives market, and that includes FX futures and OTC products, towards central clearing houses.
SGX claims that SGX FlexC will streamline any regulatory requirements that firms must adhere to. On top of this, the exchange operator claims it will reduce counterparty credit risk and lower costs.
As noted, a number of firms worked alongside SGX when developing the new service. Today’s statement suggests that BidFX, TradAir and TFS Derivatives HK, all technology providers to the institutional FX industry, supported SGX in its efforts.
Michael Syn, Head of Derivatives, SGX said: “FlexC FX offers futurised client-clearing, bringing the surety of SGX’s market-leading central counterparty Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term (CCP) to existing bilateral credit relationships, and expanding opportunities for improved Asian FX price discovery and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term workflow.”