- SGX is considering launching Asian government bond futures after discussions with global banks, reflecting growing investor interest in regional debt markets.
- Proposed futures would cover India, Indonesia, Malaysia, Philippines and Thailand, offering three, five and ten-year US dollar–settled contracts.
- India’s FAR bonds may be included; foreign investors invested US$21 billion since index inclusion, with SGX targeting launch in 2026.
The Singapore Exchange (SGX) is looking into the possibility of launching futures contracts based on Asian markets for government bonds, following a series of talks with treasury officials from major global banks, people privy to the matter have revealed.
Futures contracts would be based on the following countries' sovereign bonds: India, Indonesia, Malaysia, the Philippines, and Thailand.
Bond futures offer a mechanism for interest rate risks to be managed through the purchase or sale of bonds at a future date on an exchange. In these discussions, it becomes evident that Asia’s bond markets continue to mature and become an attractive investment sector with rising foreign investment and ease of market access.
For example, Indian government bonds have been successively incorporated into international bond indices in the last 18 months, with Malaysian bonds ranking among the best in emerging Asia last year.
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According to sources, SGX plans to offer contracts with three-year, five-year, and ten-year tenors for each of the nation’s participating in this new derivatives product. The contracts would be cash-settled in US dollars, with pricing based upon the average yield of up to three sovereign bonds.
In the case of India, the likely bonds that would be allowed in are those that come under the Fully Accessible Route, which will make bonds eligible for inclusion in the global index.
In the aftermath of Indian sovereign bonds entering JPMorgan Chase's flagship bond index in June 2024, there has been an inflow of roughly US$21 Billion from foreign investors into the Indian government debt.
SGX plans to introduce such bond futures in the first half of 2026, possibly even in the first quarter of that year itself. Presently, the talks are still on an early phase and may change regarding the specifics of the product itself.