Singapore Exchange (SGX) Thursday announced it has introduced dual currency trading that allows listed securities to be traded in two different currencies.
It said this aims to deliver greater cost efficiency to investors as they are able to trade foreign-denominated securities in their local currency.
With dual currency trading, a company can now choose for its listed security to be traded in any two different currency denominations. The securities will be fungible, and an investor can buy or sell the security in any currency regardless of the currency in which it was first bought or sold.
Dual-currency listed shares will be consolidated in investors’ Central Depository (CDP) accounts so that the total number of shares can be viewed at a glance. For example, 1,000 US dollar-denominated shares and 2,000 Singapore dollar-denominated shares will be reflected as 3,000 shares in the CDP account.
“Dual currency trading can also apply to other listed securities such as exchange traded funds,” Magnus Bocker, CEO of SGX, said. “It will benefit investors who can now choose to trade in their preferred currencies, while companies and issuers can enjoy the flexibility and potential added liquidity of having their securities trading in two currencies.”
He added that SGX will continue to find new ways to assist issuers in fund raising and investors in trading and risk management.
SGX said Hutchison Port Holdings (HPH) Trust will be the first listed security to launch dual currency units, in US dollars and Singapore dollars. It will start trading on 2 April 2012.
HPH Trust units are currently quoted and traded only in US dollars.
With the launch of dual currency trading of the units, HPH Trust will have a Singapore-dollar counter in addition to its existing US-dollar counter. This means investors will have the flexibility to trade the units in either US dollars or Singapore dollars.
“For Singapore dollar-based investors, trading in the Singapore-dollar counter may be more convenient and cost-effective without the need to incur foreign exchange costs,” HPH Trust said in a statement on Thursday.
It added that the additional Singapore-dollar counter for the units will not affect its financial position or change the total number of units issued by HPH Trust.
“We believe dual currency trading is in the best interests of our unit holders and may enhance the liquidity of our units by attracting investors who wish to invest in Singapore dollars,” Canning Fok, Chairman of the trustee-manager of HPH Trust, said.