FIA Asia eMarketBeat
Futures Industry Association Asia
Volume 03, Number 4
Sep. 3, 2010
Please direct all feedback on the FIA Asia eMarketBeat to Nick Ronalds.

Top News

Singapore Mercantile Exchange Goes Live
          Singapore Mercantile Exchange went live Aug. 31 with the launch of two crude oil and two currency contracts: euro-denominated Brent crude oil; West Texas Intermediate crude oil; Euro-U.S. Dollar currency futures; and a gold futures contract to be settled via physical delivery. The exchange’s settlement banks are Standard Chartered, RBS, and ICICI Bank. Price feeds for SMX contracts are available through Bloomberg and Reuters, the exchange said in a press release. SMX is backed by Financial Technologies (India) Limited, which has established 10 exchanges across India, Dubai, Singapore, Africa, Mauritius, and Bahrain.
         Click Here for Press Release

Eurex-KRX Link Goes Live
          On Aug. 30 the Eurex-Korea Exchange link went live, giving Eurex members direct access to Kospi 200 options, the most heavily traded options contract in the world, after Korean trading hours. In cooperation with KRX, Eurex listed daily futures on the Kospi 200 options to provide market participants trading and hedging opportunities for Kospi 200 positions during core European and North American trading hours.
         Click Here for More Information

HKEx Planning Yuan Futures
          According to an Aug. 27 Reuters story, HKEX plans to introduce Yuan exchange rate futures. No details about the timing or specifications of the contract were provided except that the contract size would be 1 million Yuan (USD 147,000). Charles Li, the CEO of HKEx, has been quoted in earlier news stories as saying a yuan-denominated product could be traded on the exchange as early as the end of the this year or early next. A related story in People’s Daily Online said that the stock exchange confirmed that it has held initial discussions with local banks and foreign banks about these contracts, but no timetable has been set for launch.
         Click Here for Reuters Report
         Click here for People’s Daily Report

Singapore

SGX to Launch Four Metals Contracts Based on LME Prices
         Singapore Exchange plans to list four futures contracts based on settlement prices provided by the London Metal Exchange. The four contracts will be based on prices for copper, aluminum, nickel and zinc. SGX issued a consultation paper describing the new contracts and set a deadline of Sept. 9 for comments. The introduction of the new contracts arose out of the partnership that the two exchanges announced earlier this year.
         Click Here for Press Release
         Click Here for Consultation

SGX, CME Extend Mutual Offset Arrangement to Cover Nifty Futures
         Singapore Exchange and the Chicago Mercantile Exchange have extended their mutual offset arrangement to include the S&P CNX Nifty Index futures contract. The addition, which became effective on July 19, allows for round-the-clock trading of the contract. The Nifty futures contract will be the fifth covered by the arrangement between SGX and CME, which has been in place since 1984. Other contracts covered by this arrangement are the Eurodollar, Euroyen, Yen Nikkei 225 and U.S. dollar Nikkei 225 futures contracts.
         Click Here for Press Release

Sicom and Tocom Collaborate to Develop Commodity Markets
         Singapore Commodity Exchange and Tokyo Commodity Exchange announced on June 1 that they have signed a "heads of terms" agreement to develop cross-listing collaboration and enhance liquidity of the Singapore and Japan commodity markets. The collaboration will pave the way for the cross-listing of each exchange’s key contracts including rubber and commodity index. In addition, Sicom and Tocom will seek to offer cross-membership so that members can remotely access each other’s exchange readily, subject to relevant regulatory approvals. Tocom announced a similar agreement with the Singapore Mercantile Exchange in April.
         Click Here for Press Release

Bloomberg: SGX Considers Scrapping Lunch Break
         Bloomberg reported on July 23 that SGX might scrap its midday trading break, citing comments by CEO Magnus Bocker. According to the report, Bocker said eliminating the break could boost trading volumes by as much as 8 to 10%. Singapore’s trading day runs from 9 a.m. to 12:30 p.m. local time, followed by a 90-minute break and an afternoon session between 2 p.m. and 5 p.m.
         Click Here for Bloomberg Report

China

WSJ: DCE Planning To List Coke Futures This Year
         At a conference it hosted in July the Dalian Commodity Exchange announced it would list coke futures before the end of the year, the Wall Street Journal reported on July 7. Liu Xingqiang, president of DCE, said the exchange is planning to list coke futures this year in order to provide a new hedging toold for coking coal businesses, steel factories and others. Since the 2008 financial crisis, the coking coal market has undergone a period of severe volatility, which has had a large impact on the related industries, and the need for enterprises to transfer risk is great, Liu said.
         Click Here for Wall Street Journal Report

Marketwatch: China Permits Wider Use of Interest Rate Swaps for Insurance Institutions
         The China Insurance Regulatory Commission is permitting wider use of interest rate swaps among insurance firms, according to a July 21 Marketwatch report. The regulator had been allowing a select group of insurers to use interest rate swaps as a trial program and has now opted to allow the entire industry to use these contracts as a hedging tool.
         Click Here for Marketwatch Report

Reuters: China to Limit Foreign Trade in Index Futures
         Reuters reported on July 19 that the China Securities Regulatory Commission would limit foreign institutional investor positions in the new stock index contract, the CSI 300, to 10% of the nominal value of their investment quota. Investments under the qualified foreign institutional investor scheme would be allowed to trade in China's recently launched index futures market for hedging purposes and any trades must be closely linked to the spot market.
         Click Here for Reuters Report
 
Bloomberg: Nomura to Boost Asia Commodity Trading
         Bloomberg reported on Aug. 3 that Nomura Holdings plans to boost commodity trading in Asia based on its expectation that China will lead a global revival in demand for iron ore, coal and metals.
         Click Here for Bloomberg Report
 
Bloomberg: China to Further Open Gold Market to Foreign Trading
         China will let more banks import and export gold and open trading further to foreign companies as near-record prices and falling stock markets spur demand in the world’s second-largest buyer of the metal, according to an Aug. 3 Bloomberg report. According to the People’s Bank of China, there may be increase in foreign members on the Shanghai Gold Exchange and officials will also study ways to allow foreign qualified bullion suppliers to deliver to the exchange, Bloomberg reported. Banks may also be allowed to hedge onshore gold positions overseas to encourage the development of yuan-denominated derivatives trading, the PBOC said in the Bloomberg report. The total volume of gold traded on the Shanghai Gold Exchange was up 59 percent from a year earlier in the first half to the equivalent of 3,174.5 metric tons (102.1 million troy ounces), according to an exchange official quoted in the article.
         Click Here for Bloomberg Report

Hong Kong SAR

HKEx Planning Yuan-Denominated Contracts, Extending Trading Hours
         Hong Kong Exchanges and Clearing is planning to introduce yuan-denominated futures contracts, Charles Li, chief executive of the exchange said at an Aug. 11 press conference to release interim results. Li also said the exchange is considering plans extend trading, by reducing the two-hour lunch break and starting a half-hour earlier in the morning. These changes are intended to better align the exchange more closely with China. Li noted that it will be a difficult process to change trading hours, as the exchange had made the proposal seven years ago but had dropped it due to opposition from local brokers.
         In other HKEx news, the exchange announced on June 23 changes to its organizational structure. As of July 1, Calvin Tai, formerly Head of the derivatives market department, became head of the exchange’s new trading division, which combines the cash market and derivatives market departments. Eric Yip, the former head of the cash market department, is now deputy chief operating officer.
         Click Here for More Details
         Click Here for Interim Results

Mark McCombe Joins HKEx’s Risk Management Committee
         Hong Kong Exchanges and Clearing welcomed the government's appointment of Mark McCombe to succeed Peter Wong as a member of HKEx's Risk Management Committee. The appointment was made under the Securities and Futures Ordinance and is for the period from July 2010 to January 2012. McCombe is currently chief executive officer Hong Kong of The Hong Kong and Shanghai Banking Corporation Limited and chairman of Hong Kong Interbank Clearing Limited.
         Click Here for Press Release

HKEx Weighing Dividend Point Index Futures
         HKEx has been working with Hang Seng Indexes on an ongoing study of the feasibility of launching futures contracts based on the two dividend point indexes, the HSI Dividend Point Index, an indicator of cash dividends from constituents of the Hang Seng Index, and the HSCEI Dividend Point Index, an indicator of cash dividends from constituents of the Hang Seng China Enterprises Index, or H-shares Index. No launch date has been announced.
         Click Here for Press Release

Hong Kong Traders Gain Direct Access to NYSE Liffe
         NYSE Liffe announced on Aug. 25 that it has received regulatory approval from the Hong Kong Securities and Futures Commission to provide automated trading services in Hong Kong, giving customers there direct access via Liffe Connect. Until now, customers in Hong Kong have had to connect to NYSE Liffe via order routing other indirect means.
         “We are delighted to be able to offer our growing customer base in Hong Kong direct and quicker access to our products. Asia is an increasingly important market for us and we are committed to developing our business in the region,” said Garry Jones, group executive vice president and head of global derivatives at NYSE Euronext.
         Click Here for Press Release

HKFE Eases Block Trade Rules
         Hong Kong Futures Exchange has revised the permissible price range for block trades in its futures and futures options contracts. Under the revised rules, which took effect on May 24, market participants can rely on either the existing price ranges or a new set of price ranges based on certain fixed percentages on either side of a reference price.
         Click Here for Press Release

Korea

Korea Exchange Introduces New Auction-Based Block Trading Service
         Korea Exchange’s proposal on its new Auction-based Block Trading Service for its securities markets was approved by the Financial Services Commission on July 21. Key functions of this new service will be an anonymous liquidity pool and VWAP transaction mechanism to accommodate large lot trading demands in the market. The new rules on A-Blox become effective as of Nov. 29.
         Click Here for Press Release

KRX Joins with Korean Government to Stimulate Treasury Bond Futures Market
         Korea’s Financial Services Commission on Sept. 1 approved a plan prepared jointly with Korea Exchange to stimulate trading of 10-year Korean treasury bond futures through several measures, including fee incentives for market-making, converting the contract to cash settlement, and increasing the contract size.
         Click Here for More Information

India

Futures and Options on India’s Sensex Index Set to Trade on Eurex in October
         Eurex and Bombay Stock Exchange announced on July 14 that they will launch futures and options on the Sensex on Oct. 4 at Eurex. The index tracks the daily performance of the 30 largest and most actively traded companies listed on the Bombay Stock Exchange.
         Click Here for Press Release

Dow Jones: Nifty Futures Contracts Started Trading On CME July 19
          Two contracts tied to India’s Nifty 50 index began trading at the CME on July 19, according to a Dow Jones report. Trading comes after the India’s National Stock Exchange and CME had entered into a cross-listing agreement last March. Volume on the first day of trading at CME was 364 contracts in the micro and 41 in the e-mini. By the end of August volume in the micro was averaging almost 2100 contracts daily and the e-mini, 110, Dow Jones reported.
         Click Here for Dow Jones Report

SEBI Approves Currency Options
          The Securities and Exchange Board issued a circular on July 30 permitting the listing of European-style currency options for Indian exchanges. Currency futures already trade on both the National Stock Exchange and the MCX Stock Exchange. The regulator stated that exchanges may list the options after obtaining approval.
         Click Here for SEBI Circular

NSE Announces Launch of Real Time Dissemination of India VIX
          The National Stock Exchange began disseminating a volatility index, a first for India, starting July 19. The NSE said it would apply to the Securities and Exchange Board for permission to list derivatives on the index after it has a demonstrated track record.
         Click Here for Press Release

Japan

Tocom to Launch a New Oil Market in October 2010
         Tokyo Commodity Exchange announced that on Oct. 12 it will launch a new oil market to be called Chukyo Oil Market. This new market will take over the market currently operated by Central Japan Commodity Exchange in response to C-COM’s request.
         Click Here for Press Release

Tocom to Extend Trading Hours
         Tokyo Commodity Exchange has decided to change the closing time of its night session from 23:00 JST to 4:00 JST (following day) as of Sept. 21, the exchange announced on June 16. From Sept. 21 onward, Tocom’s day session will commence at 9:00 JST and close at 15:30 JST, followed by the night session starting at 17:00 JST and closing at 4:00 JST on the following day. However, trading hours for the night session of the rubber market will remain unchanged, from 17:00 JST until 19:00 JST.
         Click Here for Press Release

CFTC in Agreement with Japan’s Regulators to Share Info and Cooperate in Cross-Border Investigations
         The Commodity Futures Trading Commission announced on Aug. 24 that it signed a statement of intent concerning cooperation, consultation and the exchange of information with Japan’s Ministry of Economy, Trade and Industry and its Ministry of Agriculture. This agreement establishes the framework for information sharing and cooperating in cross-border investigations.
         Click Here for Press Release

TSE to Migrate Futures Trading to Liffe Connect Platform
         Tokyo Stock Exchange’s board of directors has decided to migrate futures trading to its Tdex+ trading system, which is based on the Liffe Connect platform developed by NYSE Euronext. TSE said it is targeting the middle of 2011 for the migration, pending consultation with market participants. TSE has been using the Tdex+ system for its options products since October. TSE also said it will introduce a market-maker scheme for the futures market to further increase liquidity.
         Click Here for Press Release

Tokyo Stock Exchange Weighs Extending Trading Hours
          The Tokyo Stock Exchange is seeking public comment on its plans to extend trading hours by shortening or abolishing its 90-minute lunch break. Comments on the proposal must be received by Sept. 10.
         Click Here for TSE Discussion Paper

OSE Sets February for Launch of New Derivatives Platform
         The Osaka Securities Exchange announced on July 27 that Jgate, its next generation derivatives trading system, will be available for futures and options trading on Feb. 14, 2011. The new platform is based on technology provided by Nasdaq OMX.
         Click Here for Announcement

Tokyo Stock Exchange Lists First Precious Metals ETFs in Japan
         Four exchange-traded funds with gold, platinum, silver and palladium were approved for listing on the Tokyo Stock Exchange. These are the first ETFs backed by physical commodities to be listed in Japan. The ETFs were established by Mitsubishi UFJ Trust & Banking Corp. and Mitsubishi Corp. ETF index prices are calculated based on the futures prices of the Tocom precious metals market.
         Click Here For Press Release

Other Asia Pacific

CFTC Staff Okays TDEX Stock Index Futures Trades in U.S.
         The Commodity Futures Trading Commission announced on Aug. 18 that staff issued a no-action letter, effectively allowing trading in the U.S. of Turkish Derivatives Exchange’s future contract based on the Istanbul Stock Exchange 30 Stock Index, or the ISE-30. The stock index is a broad-based, index of 30 highly6 capitalized and actively traded stock accounting for 70% of Turkey’s market volume and market capitalization.
         Click Here for No-Action Letter

TFEX’s Baht Gold Futures Off and Running
         Thailand Futures Exchange PCL officially launched its 10-baht gold futures on Aug. 2, with 1,089 contracts traded on the first day, the exchange said. “Recently, global gold prices have been highly volatile, resulting in the need for gold futures to manage risk or make profits from such movements. We believe that 10-baht and 50-baht gold futures have a strong potential for growth,” TFEX Managing Director Kesara Manchusree said in the release.
         Click Here for Press Release

Thai Bourse to Trade Interest Rate Futures in October
         Thailand Futures Exchange, a subsidiary of the Stock Exchange of Thailand, will start trading short-term interest rate futures and bond futures beginning Oct. 18. TFEX will trade 6-month interest rate futures and 5-year government bond futures, the exchange said in the July 15 press release.
         Click Here for Press Release

CFTC Permits U.S. Customers to Deal Directly with Bursa Malaysia Brokers
         The Commodity Futures Trading Commission issued an order to Bursa Malaysia Derivatives on June 22 permitting designated Bursa Malaysia members to solicit and accept orders and customer funds directly from U.S. customers for trading on that exchange without having to register with the CFTC as futures commission merchants. The ruling, based on the so-called “Part 30” exemption, will make it easier for U.S. customers to access the commodity futures and options contracts listed on Bursa Malaysia and smoothes the way for the Malaysian exchange’s partnership with CME Group. CME owns a 25% equity stake in Bursa Malaysia Derivatives and the two exchanges are discussing the potential for cross-listings and other forms of cooperation. An explanation of the CFTC exemption rationale is on the FIA Asia website, here: http://www.fiaasia.org/regulatory.asp
         Click Here for CFTC Press Release
         Click Here for CFTC Order

Taiwan Futures Exchange Names Tony Fan as Chairman
         Tony Fan was named chairman of the Taiwan Futures Exchange. Fan, who served previously as the chairman of Taiwan Depository & Clearing Corporation, took over for Joseph Tsai, who has been appointed as the chairman of First Financial Holding Co.
         Click Here for Press Release

Reuters: Credit Suisse to Expand Commodities in Asia
         Credit Suisse aims to expand its commodities business across Asia to capitalize on demand growth in the face of volatile markets and tightening regulations in the West, according to a July 6 Reuters article. Alexander Toone, the bank’s head of commodities for Asia-Pacific, said Credit Suisse has a strong position through its fixed income and equities businesses in Asia.
         Click Here for Reuters Report

FTSE, CNBC Create New Index Series for Asia Pacific
         FTSE Group and CNBC announced on July 26 the creation of a new index series to track the performance of the 100 largest companies in Asia Pacific. The firms said the FTSE CNBC Asia Index can be licensed as the basis for exchange-traded funds, structured products, derivatives or as a performance benchmark.
         Click Here for Press Release

FIA Asia News

FIA Asia Derivatives Conference Oct. 12-14
         FIA Asia is pleased to continue the Asia Derivatives conference for 2010. The sixth annual event will be held Oct. 12-14 at the St. Regis in Singapore. This event focuses on the futures and options industry in the Asia-Pacific region, featuring information exchange sessions as well as panel discussions with industry leaders from around the region.
         Click Here for a PDF of the registration brochure and program grid

FIA Asia Representation at Seoul International Derivatives Conference
         Nick Ronalds, executive director of FIA Asia, spoke on key developments in listed derivatives markets and moderated a panel on listed derivatives at the Seoul International Derivatives Conference on Aug. 26. Panelists were Eun-Tae Lee, director, supervision coordination department, Financial Supervisory Service; In-Soo Kim, executive director, derivatives market division, KRX; and Aaron Boesky, chief executive officer of Marco Polo Pure Asset Management.
         Ronalds will also speak at World Commodities Week on Oct. 5 in London on Chinese commodity markets.