SGX hits open interest record on Indian rates shift

This article was first published in Global Investor Group.

Singapore Exchange (SGX) has hit an open interest record on its Indian rupee/US dollar (INR/USD) futures, after a rising trend in the country’s interest rate over the last year has driven hedging demand.

 The Singaporean exchange group on Monday said that the 164,332 contracts traded in the futures on June 26 marked a new record. The tally beats the 144,162 lot level it hit on April 22. That record was hit ahead of a 250 basis point increase in its main repo rate between May last year and February, from 4%.

 “Record open interest positions in INR/USD is a by-product of buyside users focusing on risk management and hedging activities right now,” John McGrath, chief revenue officer at BidFX, owned by SGX, said in a notice. “After all, as opposed to trading currency markets for alpha, most investment managers are looking for ways to manage risk around their currency exposures.

 “Growing interest in INR/USD futures shows that the buyside are turning to venues with deep liquidity to manage their currency exposure amid ongoing market uncertainty.”

 The new record means that the equivalent of $4.1 billion (£3.2bn) were held in the contracts leading into the end of the month’s trading.

SGX’s partnership with India’s National Stock Exchange for equity futures was a key strategic pillar for chief executive Loh Boon Chye as he spoke to Global Investor in May.

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