Japan bond volatility pumping up futures trading in Singapore
Trading of 10-year Japanese government bond futures at SGX has increased sixfold in 12 months.
A surge in Japan bond futures trading in Singapore has been driven by rising volatility, according to market analysts. Singapore Exchange (SGX) data reveals that trading of 10-year Japanese government bond (JGB) futures has increased sixfold over the past year, with a daily average volume of 5,400 contracts in August. This represents approximately 54 billion yen (S$432.9 million) in notional value traded per day.
While this figure is still a small portion of the more than four trillion yen daily traded in Japan, interest is growing as investors face potential Bank of Japan interest-rate hikes, inflation, and fiscal risks, including Prime Minister Sanae Takaichi's spending plans. SGX Head of Rates and Derivatives, William Chin, attributes the increased activity to the yen's role as a global funding currency and Japanese investors' extensive overseas holdings, which can cause market swings.
Trading volume reached up to 9,000 contracts in a single day last week, and SGX anticipates further growth, focusing on building liquidity in its 10- and 20-year offerings before potentially adding a 30-year contract. Chin predicts that the Japan rates market will become increasingly volatile over the next five to 10 years.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
