SGX to offer interest rate derivatives on Singapore, Tokyo benchmarks

SINGAPORE Exchange (SGX Group) : S68 0%will launch short-term interest rate futures linked to the Singapore Overnight Rate Average (Sora) and Tokyo Overnight Average Rate (Tona) for hedging and trading fluctuations in interest rates.

SGX Group said in a statement on Monday (Mar 11) that three-month Sora and Tona Futures contracts are targeted to be launched in the second half of this year, subject to regulatory approval.

Currently, SGX has long-term interest rate futures – 10-year full-sized and mini Japanese Government Bond futures, which have attracted diverse international market participants.

SGX Group is driving the futurisation of over-the-counter derivatives to enhance greater capital efficiency, price discovery and liquidity in the local Singapore dollar interest rates market, the bourse operator said.

Sora Futures will be a tool for market participants to hedge their exposure to interest rate risks, amid rising issuance of Sing dollar cash market products that reference the interest rate benchmark.

SGX commented that Tona Futures launch comes amid market expectations that Japan will stop its negative interest rate policy as interest rises in the world’s third largest government bond market and the Nikkei 225 equity benchmark clocks record highs.

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SGX closed S$0.03 lower at S$9.30 on Monday, before the bourse operator published the market statistics.