SGX to clear Asian FX forwards by Sept

The Singapore Exchange (SGX) today said it will start clearing Asian foreign exchange forwards (non-deliverable) by September.

The clearing of Asian foreign exchange (FX) forwards would include the non-deliverable currencies traded in the region, namely the Chinese yuan, Indonesian rupiah, Indian rupee, Korean won, Malaysian ringgit, Philippine peso and Taiwanese dollar.

"A world's first, this initiative is aligned with recent global regulations on mandatory clearing for non-deliverable FX forwards and FX options via a central counter party," said SGX.

The clearing of FX Forwards would be the next OTC clearing offering following the November 15, 2010, start of clearing of interest rate swaps denominated in Singapore dollars.

SGX has cleared nearly $80 billion notional of interest rate swaps since the launch.

This clearing service would enhance Singapore's global standing as a market for trading of interest rate derivatives and foreign exchange, said SGX.

Singapore was ranked the second largest interest rate derivatives and foreign exchange centre in Asia and fourth largest foreign exchange centre globally in a survey by the Bank for International Settlements.

SGX CEO Magnus Bocker said: "Demand for OTC traded financial derivatives clearing will grow rapidly and we are pleased to be able to extend the service to cover foreign exchange forwards for Asian currencies. Asia is the world's fastest-growing region and this service will benefit our members as they grow their businesses here."

The eleven SGX Clearing Members eligible to clear FX forwards are Barclays Bank, Citibank NA, Credit Suisse AG, DBS Bank Limited, Deutsche Bank AG, Hong Kong and Shanghai Banking Corporation, Oversea-Chinese Banking Corporation Ltd, Standard Chartered Bank, Royal Bank of Scotland, UBS AG and United Overseas Bank Ltd.

SGX said it was expecting that the membership would grow in the months to come, with membership interest from all banks active in these products.