SGX rolls out pioneering suite of ESG derivatives

Mon, Jan 25, 2021 – 1:14 PM

THE Singapore Exchange (SGX) has launched its pioneering suite of environment, social and governance (ESG) derivatives under the SGX First (Future in Reshaping Sustainability Together) sustainability agenda, which was announced in December 2020.

The suite of four new derivatives comprises the SGX FTSE Emerging ESG Index Futures, the SGX FTSE Emerging Asia ESG Index Futures, the SGX FTSE Asia ex Japan ESG Index Futures and the SGX FTSE Blossom Japan Index Futures.

Together they mark a key thrust of the SGX First initiative and are designed to enable seamless adoption of ESG factors into investment portfolios, said SGX in a press statement on Monday.

According to the bourse, the indices are backed by major global pension funds and drawn from leading international standards. They provide a combination of improved ESG profile while maintaining risk and return characteristics largely similar to benchmark equity indices, said SGX.

All four contracts have been developed by SGX in partnership with FTSE Russell.

They are certified by the Commodity Futures Trading Commission, which means market participants can trade them directly from the US.

“Our leadership in developing a pan-Asia shelf of benchmark equity derivatives has placed us in a distinct position to drive the change the world needs to see today. Together with FTSE Russell’s strengths in investable multi-asset products and ESG, our offering of sustainable risk-management solutions in Asia is unrivalled,” said Michael Syn, head of equities at SGX.

Shares of SGX were down by S$0.02 or 0.2 per cent at S$10.07 as at the midday trading break.