Although there has not been much activity for Philippine index futures at the Singapore Exchange (SGX), the local bourse is hopeful and satisfied with how the futures are performing at the largest offshore market for Asian futures since these were listed few weeks ago.
SGX has officially included three additional Asian equity index futures in its main index on November 25. Besides the SGX-PSE MSCI Philippines Index Futures, the trading of SGX MSCI Thailand Index Futures and the SGX MSCI India Index Futures at SGX also commenced.
A futures contract allows investors to bet on the direction of an underlying commodity, currency or index in a formal exchange, allowing hedgers and speculators to trade. The contracts are denominated in US dollars, enabling accessibility without the process of currency conversion.
“There have been a couple of contracts that have been traded already, so it means people are using the official index, as opposed to creating synthetic, right now. So that’s good. We always start small,” Hans Sicat, PSE president and chief executive officer, told reporters.
“At least, there has some activity, and to me that’s a proof that this is something that has been done a long time ago,” he added.
As to when the PSE will offer the futures in the local market, Sicat said that the bourse still has to deal with certain complicated regulatory issues.
“Having our local version here, that will be dependent on two or three things. One is local regulatory issues, which are quite complex, and secondly, I think while you can turn it on here, the success of a product like that will also depend on the fiscal regime meaning the taxation, one of the competitive disadvantages that we have, as you know,” Sicat said.
Sicat said that the PSE continues to engage with local regulators so it can move the discussions forward.
The PSE and SGX are hosting networking sessions on today in Singapore to provide investors and funds an opportunity to learn more about the Philippine market as they interact with key officials of the exchanges.