Published On: Fri, Jul 2nd, 2010

SGX Re-launches Enhanced Mini Nikkei and USD Nikkei Index Futures

Singapore Exchange (SGX) re-launched its SGX Mini Nikkei and USD Nikkei Index Futures contracts June 1 with various enhancements added. Market makers are also now available for both Mini Nikkei Futures and USD Nikkei Futures to provide liquidity.

Enhancements to the Mini Nikkei Futures include a one-hour extension to the trading hours to 3.30 pm. This allows market participants to use the contract to manage their Nikkei Futures exposure after the Yen Nikkei Futures market shuts at 2.30 pm. Bid-offer spreads for the Mini Nikkei Futures are also now under 5 basis points for orders of JPY50 million notional value. A total 1,539 Mini Nikkei futures contracts were traded during the T session today.

The Mini Nikkei Futures offers a finer tick size and smaller contract multiplier than the Yen Nikkei Futures, allowing for greater price efficiency and more precise hedging. It is fully fungible with the Yen Nikkei Futures at a ratio of 5-to-1 and offsetting positions in the Mini and Yen Nikkei Futures in the same contract month are net off when calculating margin requirements.

The USD Nikkei Futures contract is an alternative for traders who prefer a US dollar-based Nikkei exposure. It also offers opportunities for market participants to execute spread and arbitrage trading strategies between the USD Nikkei and Yen Nikkei Futures. Attractive spread margin discounts are available for traders who hold opposing positions in both contracts. Traders are able to trade the USD Nikkei Futures across extended hours via the mutual offset arrangement between SGX and the Chicago Mercantile Exchange. USD Nikkei open interest to date has exceeded US$530 million.

Ms. Janice Kan, Senior Vice President, Derivatives at SGX said, “The Mini Nikkei Futures and USD Nikkei Futures, as well as the recently-launched Nikkei Dividend Futures, add to our Nikkei product suite, providing market participants with alternative exposure to the Japanese equity market and strengthening SGX’s position as the premier risk management centre for Asian derivatives.”

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