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CAPITAL MARKETS

SGX FTSE Xinhua China index: Control of the futures

The index begins trading under a cloud after a data management firm said it intended to sue FTSE/Xinhua Index for breach of contract.

By Chris Wright

In September, the SGX FTSE Xinhua China A50 Index Futures contract, developed by the FTSE Group, began trading on the Singapore Exchange. The US-dollar contract is “the first internationally available futures contract” based on China’s A share index, says the SGX, which is pitching it as a “convenient and cost-effective way to gain exposure” to domestic Chinese stocks, and also a useful portfolio management instrument for investment funds and equity-linked products structured around the Chinese market.

But the contracts started trading under a cloud after SSE Infonet, a data management firm that is 90% owned by the Shanghai Stock Exchange, said it intended to sue FTSE/Xinhua Index for breach of contract. SSE claims that the company, a joint venture between Shanghai’s Xinhua Finance and the UK’s FTSE, has the right to use SSE data to compile indices but not to use those data to create a derivative.

China’s rival bourse

China has since launched its own financial futures exchange, CFFEX, bringing forward its launch date by several weeks, apparently because of the new Singapore contract. The new exchange is jointly owned by Shanghai Futures Exchange, Dalian Commodity Exchange, Zhengzhou Commodity Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange.

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