Singapore Exchange (SGX), which operates Asia’s largest, most diverse and fastest growing FX exchange, announced it will launch SGX FlexC FX Futures that aim to futurise OTC product offerings.

Targeted to be launched on 27 August 2018, SGX FlexC FX Futures – developed in consultation with market participants – enable bilateral trades that are privately negotiated with tailored expiration dates to be registered and cleared like a standard SGX FX futures contract. This innovative feature will be available for INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.

“Michael Syn, Head of Derivatives, SGX said, “Access to counterparty credit, especially for tenors longer than spot, is increasingly scarce and expensive in the OTC FX markets. To encourage broader adoption of price risk management in Asian FX, SGX is proud to announce the innovative FlexC FX Futures. We have worked with market participants to bring the efficiencies of futures market infrastructure into Asian FX. FlexC FX offers futurised client-clearing, bringing the surety of SGX’s market-leading central counterparty clearing house (CCP) to existing bilateral credit relationships, and expanding opportunities for improved Asian FX price discovery and risk management workflow.”

In today’s complex trading environment, SGX FlexC FX Futures aim to help streamline the regulatory obligations faced by market participants. With FX markets moving towards central clearing, this new feature will offer an effective way of enhancing operational efficiencies, lowering costs and counterparty credit risk, and keeping bilateral trading relationships at the same time.

Jean-Philippe Male, CEO, BidFX, said,“BidFX is always very happy to work on innovative solutions that address today’s complex trading and post-trade environment. We are delighted to support this initiative with SGX which will help enhance our clients operational capabilities as well as provide alternatives to a pure OTC trading workflow.”

Ayal Jedeikin, Co-Founder and CMO, TradAir, added, “We are excited to participate in this new SGX initiative. TradAir has been a pioneer of trading software for regional banks and Inter-Dealer Brokers for emerging currencies since its inception. We see great potential in utilising SGX FlexC FX Futures solution to remove existing frictions in the OTC FX markets for currency pairs associated with INR, KRW, TWD, CNH and SGX so that market participants can continue to enjoy an unparalleled level of growth as experienced in the past few years.”

Wessel van der Scheer, Managing Director, TFS Derivatives HK Ltd, said, “TFS Derivatives HK Ltd will act as an independent intermediary, operating our platform TradMatch, with institutional block-size participants providing liquidity on the SGX FlexC FX Futures. We will support a Central Limit Order Book on the outrights and the calendar spreads, while also running continuous and anonymous mid-market matching opportunities. Tradition Asia has a long-standing relationship with SGX and we hope to develop this further with the SGX FlexC FX Futures.”

Singapore remains the biggest FX centre in Asia and the third-largest globally after London and New York. FX trading activity in Singapore continues to be driven by the growth and volatility in G10 and Asian currencies. SGX’s suite of FX futures recorded a cumulative notional volume of US$385 billion from January to June 2018, up 132% year-on-year. Notably, trading volume of SGX USD/CNH futures in the same period has reached US$194 billion, surpassing the 2017 full-year volume of US$190 billion.