The Philippine Stock Exchange Inc. and Singapore Exchange Ltd. are working together to develop new Philippine equity index derivatives for listing in the local bourse.
The development follows an agreement signed in 2013 that paved the way for the listing of SGX-PSE MSCI Philippines Index Futures on SGX in November that year.
“We are laying the groundwork for development of derivative products to enable PSE to offer a more diverse product line to investors and help us catch up with peer exchanges. Our partnership with SGX wilal allow us to learn from their experience in operating a derivatives market,” said PSE president and chief executive Ramon Monzon.
The move is aimed to offer foreign investors greater variety in gaining access to the Philippine equity market, which is one of fastest-growing in Southeast Asia.
“We are pleased to broaden our cooperation with PSE to advance the Philippine derivatives market. As domestic and international markets are complementary, this enhances our role in increasing access into Asean and emerging Asia, as well as providing tools for clients to manage risk and allocate capital,” said SGX chief executive Loh Boon Chye.
Asean, or the Association of Southeast Asian Nations, which includes some of the world’s best-performing emerging markets, presents immense opportunities for international investors. If taken as a single country, with a population of over than 600 million, the group would have a gross domestic of over $2 trillion, ranking it among the 10 largest economies globally.
The PSE said it would also work with the Securities and Exchange Commission and other stock market stakeholders to develop rules and regulations for listing and trading derivative products.
Derivatives are securities whose price is dependent upon or derived from one or more underlying assets. For futures trading, derivatives can be used as an instrument to hedge risk and for speculative purposes.
Monzon earlier said the PSE planned to launch more investment products in the local bourse in a bid to boost liquidity in the stock market, including short selling and real estate investment trust.