Societe Generale launches new S&P 500 DLCs in Singapore

SOCIETE Generale on Friday (Mar 4) launched 4 new daily leverage certificates (DLCs) offering exposure to US equity indices, starting with the S&P 500 index.

The new DLCs, which have been issued at 2 different price points, provide investors with either 5x long or 5x short exposure to the daily performance of the S&P 500 index on a close-to-close basis.

They are only traded during the Singapore Exchange (SGX) market hours from 9 am to 5 pm when the US market is closed. Investors can trade the DLCs in Singapore dollars using their regular securities brokerage account.

The DLCs' intraday price movements will be closely linked to the performance of the e-mini S&P 500 futures which are traded during Asian hours, SocGen said in a separate press statement.

The e-mini S&P 500 is an electronically traded futures contract traded on the Chicago Mercantile Exchange's Globex electronic trading platform. It is based on the S&P 500 index, widely recognised as a broader measure of the US economy, tracks the 500 leading US companies and covers around 80 per cent of available market capitalisation.

"This is the first DLC in Asia that offers investors long and short exposure to the US market during Asian hours," said SGX head of equities Michael Syn in a press statement.

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Societe Generale launched the first DLC in Asia on SGX in 2017. Now, there are about 250 DLCs covering Singapore and Hong Kong indices and single stocks, with over S$10 billion crossing hands.

These DLCs track key Asian indices such as the Hang Seng Index, Hang Seng China Enterprises Index and MSCI Singapore Index.

DLCs are high-risk financial products that give investors a leveraged return based on the daily performance of an underlying reference instrument such as a stock or securities index like the Straits Times Index or the S&P 500 index.

For example, if the S&P 500 index moves by 1 per cent from its closing price of the previous day, the value of the 5x DLC will move by 5 per cent. This applies to both losses and gains.

Only investors qualified to trade in specified investment products can trade in DLCs as they have structures, features and risks that may be more complex to everyday investors.