MAS to review dollar futures
MAS to review dollar futures
SINGAPORE (Reuter): The Monetary Authority of Singapore (MAS) said yesterday it would review futures contracts based on the Singapore dollar for their relevance, usefulness and potential adverse ramifications.
"MAS is concerned about any trading activity in the Singapore dollar which has the possibility of being destabilizing to the market," MAS spokesman Quek How Jiang said in a written response to questions from Reuters.
The New York Cotton Exchange (NYCE) has said it intends to list futures contracts on the Singapore dollar, Malaysian ringgit, Indonesian rupiah and Thai baht on FINEX, its financial products division.
The contracts would mark FINEX's first move into Asian currency markets.
The Malaysia Monetary Exchange (MME) signed an agreement with the NYCE in March to allow trading of selected FINEX currency futures and options on the floor of the MME.
There have been reports this agreement could be expanded to include trading of Asian currency futures.
Singapore has long resisted internationalization of its currency and keeps a tight rein on trading of the Singapore dollar with restrictions that include requiring commercial banks to obtain MAS permission for loans exceeding Singapore $500 million to non-residents.
In response to a question about whether the MAS would impose restrictions on trading of Singapore dollar futures by domestic players, Quek said measures that affected the local dollar were "reviewed continuously for their relevance, usefulness and adverse ramifications, if any".
"Singapore dollar currency futures, if they come into being, would be taken into account in such review," Quek said.
On Singapore's potential loss of competitiveness if it did not follow the MME's lead, he said the Singapore International Monetary Exchange (SIMEX) was mindful of the increased pressure it faced from emerging countries wanting to establish their own futures exchanges.
"SIMEX will strive to position its market to respond swiftly to the hedging and trading needs of investors and continue to look for listing of new contracts," he said.