PSE ties up with Singapore exchange for derivatives

MANILA, Philippines – The Philippine Stock Exchange (PSE) and Singapore Exchange (SGX) have agreed to launch Philippine index futures by the 4th quarter of 2013.

In a joint statement, they said the index futures would be traded on the SGX, and would be based on the MSCI Philippine index.

The PSE said this would be the first step in building the local derivatives market “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 to new heights,” said PSE President and CEO Hans Sicat.

Derivatives are securities traded based on prices of their underlying assets such as stocks, bonds, commodities and currencies. A futures contract, one of the common types of derivatives, is an agreement to buy or sell an asset at a certain price and date, allowing investors to speculate or hedge against losses.

Index futures are attractive to investors looking to bet on the whole market or a sector of the market rather than just individual stocks.

“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 Bocker.

“The addition of this contract also builds upon SGX’s offering of a one-stop access into Asia’s key capital and growth markets,” he added. – Rappler.com