PSE, SGX launch Phl-linked derivatives

MANILA, Philippines - Stock exchanges in the Philippines and Singapore are collaborating to offer a new investment option for the public with the launch of Philippine-linked derivatives products.

“Philippine Stock Exchange signed (yesterday) a collaboration and licensing agreement which outlines the rights and obligations of the company and Singapore Exchange Derivatives Trading Ltd. pertaining to the development of Philippines-linked derivative products,” the local bourse said in a disclosure.

“This is pursuant to the memorandum of understanding entered into by the company with Singapore Exchange Ltd. (SGX) in March,” it added.

In March, PSE and SGX joined forces for the development and launching of derivates products.

Under the earlier memorandum, PSE and SGX moved to explore the development and promotion of Philippines futures and options to address the demands of international investors.

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.

Specifically, investors will be able to invest in the Philippines’ index futures based on the MSCI Philippines index. Both exchanges will also look into the potential listing of derivatives products on the PSE.

The PSE is launching more products and services to encourage more investors. So far, only one-half of one percent of the nearly 100 million Filipinos is engaged in the local stock market.

For instance, the first exchange traded funds (ETF) will be launched early next month. ETFs are securities and investment instruments that monitor a commodity of assets like an index fund but trades like a normal stock in an exchange.

The PSE also launched early this year the online trading platform that brokerage firms can tap to allow investors to trade and monitor stocks using their own computers and smartphones.

The PSE will likewise introduce a new disclosure system before the end of the year to allow faster dissemination of corporate announcements. It is also planning to offer fixed income securities in partnership with the country’s bond market operator.