Sydney Futures Exchange Expands Its Service Offering Following Strong Growth In Its Equity Derivative Products

Traded volumes in SPI 200^™ futures and options at the Sydney Futures Exchange in July 2002 grew by approximately 23% and 12% respectively compared to the same month in 2001, influenced by a number of development initiatives implemented over the last three months. Interest rate futures and options also performed strongly, growing 36% and 95% respectively in comparison with the same month last year.

"The performance of our equity derivative products over the last three months has been very encouraging," said Peter Hiom, General Manager of Business Development and Strategy, "The increase in traded volumes stem from the increased volatility in global equity markets and the recent enhancements and additions to our equity derivatives market."

The enhancements include the introduction of formal market makers providing continuous prices on screen, changes to the crossing mechanism, and an increase in the tick size for SPI 200™ options. All these enhancements are designed to further improve liquidity and encourage participants to bring new business to the market. In addition to these enhancements, SFE has recently listed eleven new Individual Share Futures (ISF's) to make a total of 21 ISF's comprising most of the major stocks listed on the ASX.

Both the enhancements and the new ISFs have been well received by the market with volumes improving across all equity product lines. Further to these developments, SFE is also exploring the listing of a derivative product to service the needs of property sector funds given recent weakness in cash equity market performance.

Later this month (subject to regulatory approvals) SFE will be adding further enhancements to its Block Trade Facility (BTF). The BTF is an 'off-market' trading mechanism available for selected SFE products and offers much of the flexibility and certainty of an over-the-counter (OTC) market, plus the counterparty guarantee and oversight integrity of an exchange traded market.

"The BTF enables professional market users to arrange and transact orders of significant size, tailored to their individual needs," said Hiom. "The BTF gives users pre-trade certainty of both price and execution, thereby minimising the price impact and time delays that may occur by executing through other means."

The BTF is ideal for OTC participants, fund managers, arbitrageurs and other users who wish to make large, single transactions in the course of their trading and risk management activities. By providing a mechanism for this type of trading, SFE aims to encourage OTC and other large volume trades to be transacted through SFE.