Singapore Exchange (SGX Group) plans to introduce short-term interest rate futures related to the Tokyo Overnight Average Rate (TONA) and the Singapore Overnight Rate Average (SORA) in H2 2024.
Three-month TONA Futures will expand the exchange’s Japanese derivatives portfolio, which currently includes JGB futures, SGX Nikkei 225 Index futures and options and SGX USD/JPY FX futures. SGX Group stated that its expansion in this space follows market expectation that Japan’s negative interest rate policy will come to an end, along with rising interest in the country’s bond market and “record highs” in the Nikkei 225 equity benchmark.
The expansion of the derivatives franchise follows increased demand for more transparent and cost-effective tools to hedge and trade fluctuations in interest rates, the exchange said. SGX Group currently offers 10-year full-sized and mini Japanese Government Bond (JGB) futures, which it stated “have attracted diverse international market participants”.
SORA Futures will act as a hedging tool to allow market participants to manage their exposure to interest rate risks. This follows an increase in the issuance of SGD cash market products referencing SORA, SGX Group stated.
KC Lam, global head of FX and rates at SGX Group, commented, “The uncertain interest rate environment, coupled with inflation and volatility in the macroenvironment, has increased the appeal and usage of interest rate derivatives as a cost-effective, transparent hedging and trading tool. Our planned SORA and TONA Futures will complement our expanding multi-asset derivatives franchise and provide additional cross-margining tools for global participants.”
©Markets Media Europe 2024
