The total value traded in leveraged products in Singapore in July hit the biggest monthly turnover since 2009, according to Singapore Exchange (SGX). The amount stood at S$2.3 billion (USD$ 1.7 billion) with an average daily turnover of S$106 million.
The record figure comes on the heels of a 65% growth in turnover for leveraged products in this fiscal year ending in June compared to the same period of last year. The Singapore bourse also said that the number of active clients trading its leveraged products on a monthly basis soared over 80% in the second quarter of 2018 compared to the same period a year earlier.
"This implies 85% more clients trading either warrants or DLCs from the year before which is a substantial increase," said Luuk Strijers (pictured), head of products at SGX.
While increased volatility has pushed up overall turnover of leveraged products, the new suite of DLCs introduced on the exchange by Societe Generale last summer helped expand the offering, according to Strijers.
"The launch of DLCs has been well timed in hindsight, with a market rally from July 17 to January 18 and uncertainty - and thus, higher volatility - due to impacts of potential trade wars since February this year," said Strijers. "There's always something that will move the markets, but of course, a little bit of excitement helps."
These developments have enabled SGX to grow its asset class and securities market offering, and have resulted in the biggest profit posted by the exchange in five years, and the highest revenue since 2000. The total value of the securities traded - which accounted for a quarter of the bourse's overall revenue - were up 12% to S$314 billion. While securities are made up of equities and 'other' products including structured warrants, exchange-traded funds (ETFs) and DLCs, the traded value of those other products rose over 40% to S$22.6 billion.
SGX listed three real estate ETFs in fiscal year 2018 which attracted more than S$285 million. The real estate investment trusts (REITs) tracker funds hold baskets of REITs that offer great income potential of real estate combined with the liquidity of stocks.
Despite rising global interest rates, the exchange expects continued market activity in real estate ETFs on the back of new tax laws. "REITs ETFs will enjoy a tax transparency as announced in Singapore Budget 2018," said Strijers. "Taking effect on or after July 1, the tax concessions for REITs ETFs will ensure parity in tax treatments between investing in individual Singapore real estate investment trusts (S-REITs) and REITs ETFs."
Strijers added that the Singaporean bourse has no plans to change its listing fees underscoring its competitiveness in rates against other regional markets. "The fee levels charged by exchanges depend on volumes traded as well as instruments listed," said Strijers. "[Compared to markets in Europe] Singapore has less issuers and, therefore, our product shelf is smaller in absolute terms or in product types, leading to higher relative fees."
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