singapore poolsSINGAPORE—Singapore Exchange Ltd. said Wednesday it will start clearing Asian foreign-exchange forwards by September, becoming the world's first bourse to do so. The exchange will clear nondeliverable forwards for currencies including the yuan, rupiah, rupee, won, ringgit, Philippine peso and Taiwan dollar, the exchange said in a statement, adding that the initiative "is aligned with recent global regulations on mandatory clearing for nondeliverable FX forwards and FX options via a central counterparty.
Forwards, deals to buy or sell one currency against another at a set exchange rate at a set future date, are often used by investors to speculate on currency moves. Given a push for more transparency, particularly from the U.S., in the wake of the global financial crisis, financial centers world-wide are scrambling to put longstanding over-the-counter contracts on exchanges with more open and accountable clearing mechanisms. Some U.S. congressmen have cited the lack of clearinghouses and exchanges as a cause of the blowup in exotic derivatives—beginning in the U.S. "subprime" mortgage market—that helped propagate the crisis, though critics say clearinghouses wouldn't have prevented it. In November, SGX became the first Asian exchange to offer clearing of over-the-counter derivatives, including Singapore dollar interest-rate swaps. Since then, it has cleared nearly US$80 billion notional in interest-rate-swap deals. SGX recently has been seeking to attract investors not only for equity fund-raising, but also for investments in areas such as commodities and bonds. Since its US$8.4 billion takeover bid for Australia's exchange operator ASX Ltd.
fell through, SGX has said it will grow organically. Recent initiatives include allowing trading of American depositary receipts of some major Asian companies and of local government bonds, and launching an alternative electronic trading platform for "dark pools," or large blocks of shares money managers trade anonymously. Eleven banks initially will be eligible to act as clearing members for nondeliverable forwards, or NDFs: Barclays, Citibank, Credit Suisse, DBS Bank, Deutsche Bank, HSBC, Oversea-Chinese Banking Corp., Standard Chartered Bank, Royal Bank of Scotl
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