“The move will provide investors with trading flexibility in accessing ETFs denominated in a foreign currency,” SGX said in a statement.
The ETFs will be fungible, that is, an investor can buy and/or sell the ETF in US or Singapore dollars regardless of the currency in which it was first bought and/or sold.
Previously, investors who are trading in a USD-denominated stock counter and wish to settle the trade in another currency, say SGD, will have to engage their broker to provide the foreign exchange settlement at a FX rate provided by their brokers. With this new functionality, investors can directly buy (sell) in the SGD counter if the price quoted on the exchange is lower (higher) than the converted amount that their brokers will charge or without having to wait till settlement to know the converted amount.
“With this new offering from SGX, investors can enjoy trading flexibility and cost efficiency while benefitting from investing in ETFs. Issuers will also benefit from a wider pool of investors as those who prefer to trade in Singapore dollars enter the market,” said Nels Friets, Head of Securities at SGX.
SGX worked with issuers BlackRock’s iShares and CIMB-Principal Asset Management to offer seven ETFs with a secondary trading counter in Singapore dollars, all of which are cash based full replication ETFs.
The exchange introduced dual currency trading for securities on 22 March 2012. Hutchison Port Holdings Trust was the first listed security to launch dual currency units.
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