SMX Launches Euro-Us Dollar Futures Contract For Asian Trading Time Zone
Singapore Mercantile Exchange (“SMX”), Singapore’s first pan-Asian multi-product currency and commodity derivatives Exchange, announced July 20 that it will introduce Euro-US Dollar Futures contracts when the Exchange goes live in August 2010.
The launch of this new contract leverages off the global shift of foreign exchange trading from over-the-counter to exchange traded derivatives with central counterparty clearing, a gap that SMX expects to fill in a fragmented Asian marketplace. SMX’s announcement of the new product is aimed at empowering the market players such as hedge funds, algorithmic and professional traders to hedge their foreign exchange risk. This was preceded by the introduction of three other products, Gold, Brent-Euro Crude and WTI Crude Oil futures.
Thomas J. McMahon, CEO of SMX said, “SMX’ latest offering in the Asian trading zone is timely as the region is witnessing a continuous increase in market share for foreign exchange trading. It is a strategic decision for SMX as Singapore is now the fifth largest trading centre in the world for global currency trading and is the biggest trading centre globally for emerging market currencies. Also, the Euro-US Dollar contract will complement our Brent-Euro contract for members who seek the flexibility to move their positions between the Euro and US Dollar.”
Eric T. Maine, Vice President-Head of Product and Research, at SMX added, “The depth and breadth of Asian foreign exchange markets have progressed dramatically in recent years, aided by the growth in currency volumes and diversity of market participants. SMX’s introduction of Euro-US Dollar Futures contracts will provide a timely complement to the spot trading markets in Asia.”
According to statistics released by The Bank of International Settlement (BIS), turnover of the exchange traded currency derivatives in Asia-Pacific increased dramatically to US$2.1 trillion in 2009, a six fold increase from US$353 billion in 2008. Moreover, for the year the region accounted for nearly 9% of the total turnover on the organized exchanges compared to its contribution of 1% in 2008.
The Euro-US Dollar Futures contract on SMX will not only provide an avenue for tapping this underlying scope of exchange traded currency derivatives in Asia-Pacific, but also serve as a hedging instrument involving two of the most traded currencies, namely US Dollar and Euro, in the global FX market.
The Euro-US Dollar Futures contracts will be traded in lots of 25,000 Euros, quoted in US Dollars per Euro to four decimal places. Trading hours for the contracts are from 1000 to 2400 hours (2300 during British Summer Time) Singapore time from Monday to Friday. Trading will be conducted in each current month and four quarterly months – March, June, September and December. Last Trading Day is two business days prior to the third Wednesday of the contract month. Settlement will be done in physical cash at the London Currency Fixing Rate published at 1600 hours (London Time); Final Settlement for each maturing contract is the third Wednesday of the delivery month.
SMX has received in-principle approval from the Monetary Authority of Singapore to operate Singapore’s first pan-Asian multi-product currency and commodity derivatives exchange. The Exchange is slated to go live in August 2010 on its state-of-the-art electronic trading platform and it will be conducting conformance testing with the ISVs and industry wide testing with member firms prior to commencing trading operations in August.