Singapore Exchange (SGX) has announced that it will commence trading of Daily Leverage Certificates (DLCs) on Asian indices starting from July 17, 2017.
SGX is Asia’s first venue to offer trading in DLCs, allowing Specified Investment Products (SIP)-qualified investors to gain fixed leveraged exposure to key Asian indices. DLCs come without implied price volatility, time decay and margin calls, features impacting pricing for options. DLCs have received wide interest from investors in Europe where they are also called constant leveraged products or factor certificates.
The first batch of DLCs issued by Societe Generale will consist of 10 products, including Long and Short DLCs offering fixed leverage of three or five times the daily returns of the underlying indexes, namely MSCI Singapore, Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI). The Long and Short DLCs, designed to be traded predominantly on an intra-day basis, offer the flexibility to benefit from both rising and falling markets.
Chew Sutat, Head of Equities and Fixed Income, SGX, said,
SGX is pleased that Societe Generale, one of the largest issuers of DLCs in Europe, has chosen Singapore as the first venue in Asia to launch DLCs, one of the fastest growing listed structured products in Europe since 2012. This first-of-its-kind offering in Asia will provide investors in the region an exchange-traded instrument to capture leveraged returns on daily market moves. We welcome and look forward to such offerings that meet the evolving needs of investors in Asia.
Keith Chan, Head of Cross Asset Listed Distribution at Societe Generale’s Global Markets in Asia Pacific, said, “Societe Generale is excited to be the first bank in Asia to bring DLCs to Singapore and the region. Since its emergence in 2012, DLCs have become the fastest growing listed products by volume in Europe and we see strong appetite for leveraged products from Asian investors. Our recognised leadership in equity derivatives and our solid experience with DLCs in Europe make us an ideal partner with SGX to introduce this new product to Singapore.”