SGX has released data showing that the total volume of its FX futures contracts grew 74% year-on-year to 759,983 contracts in July, and open interest in these contracts was up 15% YoY to 60,105 contracts as at the end of July.
The renminbi continued to strengthen against the US dollar in July, extending a trend from the previous month. However, the USD/CNH spot market traded in a narrow range resulting in low volatility that also affected overall volumes for USD/CNH futures across various exchanges.
While the total exchange-traded USD/CNH futures contracts traded globally fell 12% month-on-month in July, the volume for SGX’s USD/CNH futures in the month fell by 7.7% to 150,567 contracts.
Since launching its initial suite of FX products four years ago, SGX has reported consistent growth in this business segment. But can the exchange sustain the momentum going forward? Reporting from Asia, Galen Stops takes a look.
Back in November 2013, Singapore Exchange (SGX) went live with trading for six deliverable and non-deliverable currency pairs: AUD/USD, AUD/JPY, USD/SGD, INR/USD, KRW/USD and KRW/JPY. As Profit & Loss noted at the time, the aim was clearly to establish SGX as the major hub for Asian currency futures trading.
Fast forward four years and it appears that the exchange is well on its way to achieving this ambition, with the star performers in its FX suite being the INR/USD and USD/CNH contracts, the latter of which was launched in 2014.
The aggregate volume for SGX FX futures stayed above 1 million contracts, or approximately US$ 53 billion, for the full month, representing year-on-year (y-o-y) growth of 99.3%.
The average daily volume (ADV) of FX contracts traded on the exchange in February was 1.17 million. On a Year-to-Date (YTD) basis, this represents an increase of 123% over the corresponding period in 2017.
SGX’s USD/CNH futures saw a pick-up in activity last month, with 10 successive days of trading in excess of $1 billion, including two consecutive days of trading above $2 billion.
SGX has reported that 1.09 million FX futures contracts were traded on its platform last month, up 88% compared to April 2017.
This also represents the fourth consecutive month that the number FX contracts on the exchange have exceeded over 1 million.
The cumulative open interest for all FX contracts is up 37% m-o-m and 74% y-o-y. In April, SGX also reached the milestone of $ 1 trillion worth of cumulative notional trading in INR/USD and USD/CNH futures since their inception in 2013 and 2014, respectively.
Singapore Exchange (SGX), is launching a new product, SGX FlexC FX Futures, with the aim of “futurising” certain OTC FX product offerings.
Targeted for launch on August 27, 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 feature will be available for INR/USD, KRW/USD, TWD/USD, USD/CNH and USD/SGD contracts.
Michael Syn, head of derivatives at SGX, says: "Access to counterparty credit, especially for tenors longer than spot, is increasingly scarce and expensive in the OTC FX markets.
The total volume of FX futures traded on SGX in July was 1.7 million, down 8% month-on-month, despite the exchange seeing record volumes in its USD/CNH futures.
Although volumes were down last month compared to June, they were still up 124% year-on-year. The monthly decrease appears to have been driven by a decline in volumes on SGX’s INR/USD futures, with trading down 23% m-o-m but still up 81% y-o-y.
The bright spot for SGX in July was trading on its USD/CNH futures, as a record $61.5 billion in notional was traded on these contracts, bringing the total volume of these contracts cleared to over $255 billion this year.
Trading on SGX’s FX Futures more than doubled to $914 billion in 2018 as the exchange saw a record monthly volume of $96 billion traded in December.In aggregate, 1.76 million FX futures contracts were traded on SGX in December, up 87% from the same month in 2017. Meanwhile, the notional volume of $96 billion traded on the platform was a 122% year-on-year increase.“The robust annual growth is strong evidence of the role SGX plays as a key risk management venue for market participants as they manage their Asian currency risk exposure,” says the exchange group in its monthly newsletter.
Trading on SGX’s FX futures hit an all-time in January, with $105 billion in notional value and 1.87 million in aggregate contracts traded. Year-on-year, this represents a 60% growth in terms of notional value and a 30% growth in the volume of contracts traded. Average daily volume (ADV) of contracts traded last month grew to approximately 85,000 contracts from 68,000 in January 2018, while the notional ADV traded per day grew to $4.8 billion in January 2019, up from $3.1 billion the same month the previous year.