Phl, Singapore stock exchanges to launch Phl-linked derivatives

MANILA, Philippines - Stock exchanges in the Philippines and Singapore are joining forces for the development and launching of derivatives products.

The move will further diversify the product offerings of both stock exchanges amid a robust equities market, particularly in the Philippines.

In a statement, the Philippine Stock Exchange (PSE) and the Singapore Exchange (SGX) said they entered into a memorandum of understanding “to cooperate in the development of Philippines-linked derivatives products.”

Under the memorandum, PSE and SGX will explore the development and promotion of Philippines futures and options to address the demands of international investors.

“We look forward to leveraging on SGX’s experience and network, alongside growing investment interest in the Philippines, to bring the country’s capital markets to new heights,” said PSE president and CEO Hans B. Sicat.

Specifically, investors will be able to invest in the Philippines index futures based on the MSCI Philippines index starting in the fourth quarter.

“With this futures contract, investors are assured of an efficient and effective risk management tool as they tap opportunities offered by the Philippine economy,” said SGX CEO Magnus Böcker.

“Both exchanges will also look into the potential listing of derivatives products on the PSE in due course in response to the needs of the markets,” the stock exchanges said.

According to investopedia.com, derivatives are securities whose price is dependent upon or derived from one or more underlying assets. For futures trading, derivatives can be used as an instrument to hedge risk and for speculative purposes.

Böcker said the agreement builds upon SGX’s offering of a one-stop access into Asia’s key capital and growth markets.

The PSE earlier announced plans to develop commodity and derivative trading in the Philippines as new investment products.

The PSE index, which recorded 38 all-time highs on its way to growing 33 percent and closing at 5,812.83 last year, was the second best performing benchmark index in Asia, next only to the 36.3 percent climb of Thailand’s SET index.

So far this year, the benchmark index has recorded 23 record  highs, with analysts expecting it to end the year near the 7,400 level.