The listing of credit derivatives will add further depth to SGX's derivatives market. SGX intends to collaborate with other exchanges to create a global marketplace for credit derivatives futures. It is part of the exchange's strategy to grow its business through product innovation which leverages off its infrastructure, market knowledge and its role as a leading Asian derivatives exchange.
SGX CEO, Hsieh Fu Hua, said, "We are happy to establish this relationship with Dow Jones Indexes in pioneering the development of futures based on the suite of Dow Jones Trac-X indexes. Credit derivatives are currently traded over the counter in global markets. With the demonstrated interest from institutional participants in credit derivatives, we intend to develop a global network for the trading and listing of such contracts which will replicate the success of the Mutual Offset System link with the Chicago Mercantile Exchange. This will provide our institutional customers the opportunity to trade in these products around the clock. Ultimately, they will not only get to enjoy greater choice and increased liquidity, but also efficient access and transparent price discovery to contracts based on widely traded indexes."
Michael A. Petronella, president, Dow Jones Indexes/Ventures says: "We are enthusiastic having signed this MoU with SGX to license the Dow Jones TRAC-X indexes for exchange traded products. The high volume of credit derivative trading in the OTC market has long justified exchange-based financial products and now for the first time with the Dow Jones TRAC-X index family we can offer a transparent, neutrally branded, unbiased and well recognized family of indexes to underlie this product. We also expect to license the Dow Jones TRAC-X index family to exchanges in Europe and the U.S."
Since the launch of TRAC-X on April 1, 2003, over US$150 billion linked to the Dow Jones TRAC-X Indexes has traded and 38 indexes have been launched in addition to many other related products such as options and tranches based on the various indexes. The major regional Dow Jones TRAC-X Indexes that have launched to date include: Dow Jones TRAC-X Europe, Dow Jones TRAC-X NA (North America), Dow Jones TRAC-X NA High Yield, Dow Jones TRAC-X Europe High Yield, Dow Jones TRAC-X Japan, Dow Jones TRAC-X Australia, Dow Jones TRAC-X EM (Emerging Markets) and Dow Jones TRAC-X Asia.
