SGX launches single-stock daily leverage certificates with 5 times leverage

Signage at the SGX building on Shenton Way in Singapore; taken October 2018.Signage at the SGX building on Shenton Way in Singapore; taken October 2018.

Singapore Exchange said on Thursday that it welcomed the listing of an initial 10 new single stock daily levrerage certificates (DLC), which will offer five times leverage on Singapore blue-chip companies and regional stocks.

The single stock DLCs, which are issued by Societe Generale, give specified investment products (SIP)-qualified investors the ability to take leveraged long or short positions on the daily performance of the underlying stocks, it said.

The single-stock DLCs will include selected Straits Times Index component stocks and Hang Seng Index stocks including Tencent Holdings and Ping An Insurance, SGX said in the filing.

Currently, SGX lists 18 DLCs on three development market indexes — MSCI Singapore, the Hang Seng Index and the Hang Seng China Enterprises Index, with leverage levels of three, five and seven times, it said.

Since SGX’s introduction of DLC trading in July 2017, the product’s turnover has exceeded S$3.5 billion, it said.

“We are pleased that Societe Generale is expanding its DLC shelf in Singapore for the third time in less than two years, a testament to the growing appeal of DLCs amongst investors. This will also broaden the range of innovative and attractive trading products offered by brokers,” Chan Kum Kong, head of research and products at SGX, said in the filing.

“DLCs offer investors the opportunity to benefit from both rising and falling markets. With DLCs gaining traction from both retail and  institutional participants, we expect the demand for our listed structured products to continue to grow in tandem,” Chan Kum Kong said.

Keith Chan, head of cross asset listed distribution at Societe Generale’s global markets in Asia Pacific, said his company had been receiving positive feedback on the product.

“We think it is the right time to expand the underlying coverage to single stocks. Our proven global equity derivatives leadership and experience with DLC products in Europe and Asia enables us to deliver a unique and tailored product offering to the market that matches investor appetite,” Keith Chan said.


Get the Shenton Wire morning briefing in your inbox