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Singapore Exchange Fluctuates, Scales Back Pact With MSCI

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Singapore Exchange Ltd. is starting to reduce MSCI Inc. pact sooner than expected, citing market uncertainty into year-end to speed up delisting the largest derivatives product it has in partnership utilizing the index provider.

The exchange will migrate all positions that are open the MSCI Taiwan Index futures to its newly launched FTSE contracts on Oct. 30 and the MSCI item will then be suspended, Michael Syn, who oversees both the stock and futures businesses, said in an interview. The MSCI product had formerly been set to wind down at the time of the license termination in February.

“There’s uncertainty as to what the marketplace should expect November onward because associated with the U.S. election” and December holidays, Syn said, adding the delisting has been brought forward to avoid potential operational issues and “to make everyone’s that’s certain in before the elections.”

The move comes after MSCI’s decision in May to shift index licensing for some derivatives products from Singapore to Hong Kong. Come February, the city-state’s exchange to its pact will be limited to products based on MSCI’s Singapore indexes. SGX has partnered with FTSE Russell to introduce new offerings and finalized a deal that is broad-ranging spans multiple asset classes. MSCI products currently comprise 10% to 15% of the exchange’s net profit.

The bourse introduced the SGX FTSE Taiwan Index Futures contracts in July and there’s liquidity that is already ample make the move, Syn said. Total return surpassed $1.5 billion in the week that is first of. This is the time that is very first exchange will migrate open interest on behalf of customers, he stated. Singapore Exchange Ltd. is starting to reduce MSCI Inc. pact sooner.

The Taiwan contracts accounted for over half of the volumes of all MSCI derivatives products trading regarding the exchange, and about 12% of overall equity derivatives volumes, in fiscal 2020 year. According to Syn, U.S. customers are key to the Taiwan business, with about 26% of volume occurring overnight amid demand from American investors for the index that is technology-heavy.

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