Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
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<ul>
<li>
A second batch of Single Stock Daily Leverage Certificates (DLCs) consisting of 10 new underlying stocks will start trading on 26 February. The Single Stock DLCs provide 5X leverage exposure to the daily performance of the underlying stock on both Long and Short.   
	 </li>
	<li>
Of the 10 new underlying stocks, there are 4 Singapore names consisting of CapitaLand, Genting Singapore, Wilmar and Yangzijiang and 6 Hong Kong names consisting of AIA, China Construction Bank, Geely Auto, Galaxy Entertainment, HKEx and HSBC. 
	 </li>
	<li>The addition of these 10 new underlying stocks widens the Single Stock DLCs offering and provides traders with a cheaper alternative in terms of capital outlay and trading costs to gain exposure to some of these blue chip stocks.</li>
</ul>
Daily Leverage Certificates (DLCs) are financial instruments issued by a third-party financial institution, in this case Societe Generale, and are traded on the SGX securities market. DLCs seek to achieve short-term investment results that correspond to the daily magnified performance of the underlying index or stock.

With the addition of this second batch of Single Stock DLCs, DLC traders can look forward to a wider range of underlyings consisting of key Asian indices such as the MSCI Singapore Index and Hang Seng indices as well as a total of 20 Singapore and Hong Kong blue chip stocks.

10 new underlying stocks to widen the range of Single Stock DLCs 

Coming Tuesday 26 February, the Single Stock DLCs on 10 new underlying stocks will be listed for trading. There will be 4 Singapore names consisting of CapitaLand, Genting Singapore, Wilmar and Yangzijiang and 6 Hong Kong names consisting of AIA, China Construction Bank, Geely Auto, Galaxy Entertainment, HKEx and HSBC.

The performance of each of these stocks will be tradable via a 5x Long and 5x Short DLC. Tabled below are the details of the new Single Stock DLCs.

<table class="table table-striped"><tbody>
<tr>
<td>
			Market
			</td>
			<td>
			Underlying Stock
			</td>
			<td>
			Stock Code
			</td>
			<td>
			Counter Name
			</td>
			<td>
			Issue Price (SGD)*
			</td>
		</tr>
<tr>
<td rowspan="8">
			Singapore
			</td>
			<td rowspan="2">
			Genting Singapore
			</td>
			<td>
			DNEW
			</td>
			<td>
			DLC SG5xLong Genting
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td>
			DMPW
			</td>
			<td>
			DLC SG5xShort Genting
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td rowspan="2">
			CapitaLand
			</td>
			<td>
			DLQW
			</td>
			<td>
			DLC SG5xLong CapLand
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td>
			DKFW
			</td>
			<td>
			DLC SG5xShort CapLand
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td rowspan="2">
			Yangzijiang
			</td>
			<td>
			DJRW
			</td>
			<td>
			DLC SG5xLong YZJ
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td>
			DXUW
			</td>
			<td>
			DLC SG5xShort YZJ
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td rowspan="2">
			Wilmar
			</td>
			<td>
			DFHW
			</td>
			<td>
			DLC SG5xLong Wilmar
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td>
			DNXW
			</td>
			<td>
			DLC SG5xShort Wilmar
			</td>
			<td>
			0.25
			</td>
		</tr>
<tr>
<td rowspan="12">
			Hong Kong
			</td>
			<td rowspan="2">
			HSBC
			</td>
			<td>
			DZLW
			</td>
			<td>
			DLC SG5xLong HSBC
			</td>
			<td>
			2.20
			</td>
		</tr>
<tr>
<td>
			DYAW
			</td>
			<td>
			DLC SG5xShort HSBC
			</td>
			<td>
			2.20
			</td>
		</tr>
<tr>
<td rowspan="2">
			CCB
			</td>
			<td>
			DXMW
			</td>
			<td>
			DLC SG5xLong CCB
			</td>
			<td>
			0.50
			</td>
		</tr>
<tr>
<td>
			DWBW
			</td>
			<td>
			DLC SG5xShort CCB
			</td>
			<td>
			0.50
			</td>
		</tr>
<tr>
<td rowspan="2">
			HKEx
			</td>
			<td>
			DVOW
			</td>
			<td>
			DLC SG5xLong HKEx
			</td>
			<td>
			2.20
			</td>
		</tr>
<tr>
<td>
			DVVW
			</td>
			<td>
			DLC SG5xShort HKEx
			</td>
			<td>
			2.20
			</td>
		</tr>
<tr>
<td rowspan="2">
			  Galaxy Ent
			</td>
			<td>
			DTNW
			</td>
			<td>
			DLC SG5xLong Galaxy
			</td>
			<td>
			0.60
			</td>
		</tr>
<tr>
<td>
			DSCW
			</td>
			<td>
			DLC SG5xShort Galaxy
			</td>
			<td>
			0.60
			</td>
		</tr>
<tr>
<td rowspan="2">
			  Geely Auto
			</td>
			<td>
			DRWW
			</td>
			<td>
			DLC SG5xLong Geely
			</td>
			<td>
			0.40
			</td>
		</tr>
<tr>
<td>
			DQDW
			</td>
			<td>
			DLC SG5xShort Geely
			</td>
			<td>
			0.40
			</td>
		</tr>
<tr>
<td rowspan="2">
			AIA
			</td>
			<td>
			DPWW
			</td>
			<td>
			DLC SG5xLong AIA
			</td>
			<td>
			0.80
			</td>
		</tr>
<tr>
<td>
			DAAW
			</td>
			<td>
			DLC SG5xShort AIA
			</td>
			<td>
			0.80
			</td>
		</tr>
</tbody></table>
* The Issue Price as tabled above will be taken as the intrinsic close value of the DLC on 25 February. When trading starts on Tuesday, 26 February, the 5x performance of the DLC will be with reference to this intrinsic close value on 25 February. Investors should refer to the term sheets published on the issuer’s website (dlc.socgen.com) and SGX company announcement website for the full details. 

Source: SGX (Note that all of the above Single Stock DLCs have an expiry date of 25 February 2022)

 

5x Leverage Exposure on the Daily Performance of the Underlying Stock

While the expiry date of the Single Stock DLCs above is in three years, i.e. 25 February 2022, they are generally designed for short term trading, with typical holding periods ranging from intra-day to five trading sessions.

With five times leverage on the daily performance of the underlying stock, the DLCs provide investors with the ability to make enhanced returns within a short period of time but also the risk of substantial losses if the underlying stock moves against the investor.

Tabled below are the simulated absolute daily performance of the 5x DLCs using historical absolute daily performance (close-to-close) of the underlying stocks. The data below is aimed at providing traders with a sense of the daily volatility of the underlying stock and the corresponding daily movement on the 5x DLC.

<table class="table table-striped"><tbody>
<tr>
<td>
			 
			</td>
			<td>
			Genting 
			</td>
			<td>
			CapitaLand
			</td>
			<td>
			YZJ
			</td>
			<td>
			Wilmar
			</td>
			<td>
			HSBC
			</td>
			<td>
			CCB
			</td>
			<td>
			HKEx
			</td>
			<td>
			Galaxy 
			</td>
			<td>
			Geely 
			</td>
			<td>
			AIA
			</td>
		</tr>
<tr>
<td>
			Absolute Median Daily % Change of the underlying stock (close-to-close)
			</td>
			<td>
			0.9%
			</td>
			<td>
			0.7%
			</td>
			<td>
			1.6%
			</td>
			<td>
			0.6%
			</td>
			<td>
			0.6%
			</td>
			<td>
			0.9%
			</td>
			<td>
			1.1%
			</td>
			<td>
			1.5%
			</td>
			<td>
			1.9%
			</td>
			<td>
			1.2%
			</td>
		</tr>
<tr>
<td>
			Simulated absolute daily performance on the 5x DLC 
			</td>
			<td>
			4.6%
			</td>
			<td>
			3.3%
			</td>
			<td>
			8.1%
			</td>
			<td>
			3.1%
			</td>
			<td>
			3.1%
			</td>
			<td>
			4.3%
			</td>
			<td>
			5.4%
			</td>
			<td>
			7.5%
			</td>
			<td>
			9.5%
			</td>
			<td>
			6.1%
			</td>
		</tr>
</tbody></table>
Source: Bloomberg (data period from 1 January 2018 to 21 February 2019). Performances of the DLCs are based on the assumption of no costs and fees and currency exchange impact. The performances can be a gain or a loss depending on directional view of the trader with respect to the actual underlying movement. The information on the above is for illustrative purposes only, and is not indicative of future performance.

Compounding Effect

Investors that hold the DLCs for longer than one Trading Day will notice that the return could be more or less than the leverage factor that is embedded within the DLC. This is because the performances of the underlying asset and the DLCs are reset at the end of each Trading Day.

When markets open on the next day, the performances of the underlying asset and the DLCs will be measured from the intrinsic closing levels recorded on the previous Trading Day. What this means, in practice, is the performance each day is locked in, and any subsequent returns are on top of what was achieved the day before. This is a process referred to as 'compounding'.

The compounding effect can positively enhance returns in trending markets (upward or downward) whilst negatively impacting returns when the markets are more volatile or trend sideways for long periods. To learn more about the compounding effect and other features of the DLCs, click <a href="https://www2.sgx.com/research-education/securities-products#Daily%20Leverage%20Certificates">here</a>.

DLCs offer a cheaper alternative to gain exposure to blue chip stocks

The Single Stock DLCs will be priced between S$0.25 to S$2.20 depending on the underlying stock. This means that investors can gain 5x leverage exposure to the underlying stock with a lower capital outlay.

Taking AIA for example and assuming AIA is currently at HKD75 (S$13), the investor would need capital of S$2,600 (S$13 x min lot size 200 units) to gain exposure to AIA as compared to a capital of S$80 (S$0.80 issue price of the AIA DLC x min lot size 100 units) if the investor uses the DLC.

In addition to a lower capital outlay, the intraday trading costs for DLCs is cheaper than trading the stock for an investor who wishes to gain S$10,000 worth of exposure to the underlying stock as highlighted in a previous market update <a href="https://www2.sgx.com/research-education/market-updates/20181105-new-single-stock-daily-leverage-certificates-5x-leverage">here</a>.

In comparison to other leveraged instrument such as Contract for Differences (CFDs), the trading commission charged by the broker for DLCs is on average lower than CFDs. Notably, the commission charge for the CFD is based on the entire contract value while that of the DLC is based on the amount of the DLC purchased (20% of contract value). The table below illustrates the comparison on commissions.
<figure>
 <img src="https://api2.sgx.com/sites/default/files/2019-02/DLC%20Info.PNG" alt="DLC info">
 </figure>
 <div class="content-caption">DLC info</div>
Investors should also read all listing documents provided by the issuer for other features such as the airbag mechanism, the risks and other information related to the product before trading the DLCs. The documents can be found under company information on SGX website or the Issuer’s website (dlc.socgen.com).

 

Specified Investment Products (SIPs)

Structured Warrants, Daily Leverage Certificates and synthetic ETFs are products with features that might be more complex in nature and are only suitable for investors who possess the investment knowledge of more complex products and have a high risk tolerance. Hence, all investors need to be qualified to trade in Specified Investment Products (“SIPs”) to be able to trade in these products. Speak to your broker to find out more on how you can qualify to trade SIPs.

Where can I find more information?

<table class="table table-striped"><tbody><tr>
<td>
			Benefits of ETFs 

			<ul>
<li>Educational videos (<a href="https://www2.sgx.com/research-education/securities-products#ETF">link</a>)</li>
				<li>Full list of SGX listed ETFs (<a href="https://api2.sgx.com/sites/default/files/2019-01/ETF_Summary_Info_03%20Jan%202019%20v2.pdf">link</a>)</li>
			</ul>
</td>
			<td>
			Trading Warrants

			<ul>
<li>Educational videos (<a href="https://www2.sgx.com/research-education/securities-products#Structured%20Warrants">link</a>)</li>
				<li>Investor guide (<a href="https://api2.sgx.com/sites/default/files/2018-12/SGX%20Structured%20Warrants%20Investor%20Guide.pdf">link</a>)</li>
			</ul>
</td>
			<td>
			Trading DLCs

			<ul>
<li>Factsheet (<a href="https://api2.sgx.com/sites/default/files/2018-10/SGX%20DLC%20Factsheet_Oct%202018_English.pdf">link</a>)</li>
				<li>Investor guide (<a href="https://api2.sgx.com/sites/default/files/2018-10/SGX97062_DLC_Brochure_Updates_October%202018.pdf">link</a>)</li>
			</ul>
</td>
		</tr></tbody></table>
</body></html>





A second batch of Single Stock Daily Leverage Certificates (DLCs) consisting of 10 new underlying stocks will start trading on 26 February. The Single Stock DLCs provide 5X leverage exposure to the daily performance of the underlying stock on both Long and Short.   
	 
	
Of the 10 new underlying stocks, there are 4 Singapore names consisting of CapitaLand, Genting Singapore, Wilmar and Yangzijiang and 6 Hong Kong names consisting of AIA, China Construction Bank, Geely Auto, Galaxy Entertainment, HKEx and HSBC.  
	 
	The addition of these 10 new underlying stocks widens the Single Stock DLCs offering and provides traders with a cheaper alternative in terms of capital outlay and trading costs to gain exposure to some of these blue chip stocks.

Daily Leverage Certificates (DLCs) are financial instruments issued by a third-party financial institution, in this case Societe Generale, and are traded on the SGX securities market. DLCs seek to achieve short-term investment results that correspond to the daily magnified performance of the underlying index or stock.

With the addition of this second batch of Single Stock DLCs, DLC traders can look forward to a wider range of underlyings consisting of key Asian indices such as the MSCI Singapore Index and Hang Seng indices as well as a total of 20 Singapore and Hong Kong blue chip stocks.

10 new underlying stocks to widen the range of Single Stock DLCs 

Coming Tuesday 26 February, the Single Stock DLCs on 10 new underlying stocks will be listed for trading. There will be 4 Singapore names consisting of CapitaLand, Genting Singapore, Wilmar and Yangzijiang and 6 Hong Kong names consisting of AIA, China Construction Bank, Geely Auto, Galaxy Entertainment, HKEx and HSBC.

The performance of each of these stocks will be tradable via a 5x Long and 5x Short DLC. Tabled below are the details of the new Single Stock DLCs.




			Market
			
			
			Underlying Stock
			
			
			Stock Code
			
			
			Counter Name
			
			
			Issue Price (SGD)*
			
		


			Singapore
			
			
			Genting Singapore
			
			
			DNEW
			
			
			DLC SG5xLong Genting
			
			
			0.25
			
		


			DMPW
			
			
			DLC SG5xShort Genting
			
			
			0.25
			
		


			CapitaLand
			
			
			DLQW
			
			
			DLC SG5xLong CapLand
			
			
			0.25
			
		


			DKFW
			
			
			DLC SG5xShort CapLand
			
			
			0.25
			
		


			Yangzijiang
			
			
			DJRW
			
			
			DLC SG5xLong YZJ
			
			
			0.25
			
		


			DXUW
			
			
			DLC SG5xShort YZJ
			
			
			0.25
			
		


			Wilmar
			
			
			DFHW
			
			
			DLC SG5xLong Wilmar
			
			
			0.25
			
		


			DNXW
			
			
			DLC SG5xShort Wilmar
			
			
			0.25
			
		


			Hong Kong
			
			
			HSBC
			
			
			DZLW
			
			
			DLC SG5xLong HSBC
			
			
			2.20
			
		


			DYAW
			
			
			DLC SG5xShort HSBC
			
			
			2.20
			
		


			CCB
			
			
			DXMW
			
			
			DLC SG5xLong CCB
			
			
			0.50
			
		


			DWBW
			
			
			DLC SG5xShort CCB
			
			
			0.50
			
		


			HKEx
			
			
			DVOW
			
			
			DLC SG5xLong HKEx
			
			
			2.20
			
		


			DVVW
			
			
			DLC SG5xShort HKEx
			
			
			2.20
			
		


			  Galaxy Ent
			
			
			DTNW
			
			
			DLC SG5xLong Galaxy
			
			
			0.60
			
		


			DSCW
			
			
			DLC SG5xShort Galaxy
			
			
			0.60
			
		


			  Geely Auto
			
			
			DRWW
			
			
			DLC SG5xLong Geely
			
			
			0.40
			
		


			DQDW
			
			
			DLC SG5xShort Geely
			
			
			0.40
			
		


			AIA
			
			
			DPWW
			
			
			DLC SG5xLong AIA
			
			
			0.80
			
		


			DAAW
			
			
			DLC SG5xShort AIA
			
			
			0.80
			
		

* The Issue Price as tabled above will be taken as the intrinsic close value of the DLC on 25 February. When trading starts on Tuesday, 26 February, the 5x performance of the DLC will be with reference to this intrinsic close value on 25 February. Investors should refer to the term sheets published on the issuer’s website (dlc.socgen.com) and SGX company announcement website for the full details. 

Source: SGX (Note that all of the above Single Stock DLCs have an expiry date of 25 February 2022)

 

5x Leverage Exposure on the Daily Performance of the Underlying Stock

While the expiry date of the Single Stock DLCs above is in three years, i.e. 25 February 2022, they are generally designed for short term trading, with typical holding periods ranging from intra-day to five trading sessions.

With five times leverage on the daily performance of the underlying stock, the DLCs provide investors with the ability to make enhanced returns within a short period of time but also the risk of substantial losses if the underlying stock moves against the investor.

Tabled below are the simulated absolute daily performance of the 5x DLCs using historical absolute daily performance (close-to-close) of the underlying stocks. The data below is aimed at providing traders with a sense of the daily volatility of the underlying stock and the corresponding daily movement on the 5x DLC.




			 
			
			
			Genting 
			
			
			CapitaLand
			
			
			YZJ
			
			
			Wilmar
			
			
			HSBC
			
			
			CCB
			
			
			HKEx
			
			
			Galaxy 
			
			
			Geely 
			
			
			AIA
			
		


			Absolute Median Daily % Change of the underlying stock (close-to-close)
			
			
			0.9%
			
			
			0.7%
			
			
			1.6%
			
			
			0.6%
			
			
			0.6%
			
			
			0.9%
			
			
			1.1%
			
			
			1.5%
			
			
			1.9%
			
			
			1.2%
			
		


			Simulated absolute daily performance on the 5x DLC 
			
			
			4.6%
			
			
			3.3%
			
			
			8.1%
			
			
			3.1%
			
			
			3.1%
			
			
			4.3%
			
			
			5.4%
			
			
			7.5%
			
			
			9.5%
			
			
			6.1%
			
		

Source: Bloomberg (data period from 1 January 2018 to 21 February 2019). Performances of the DLCs are based on the assumption of no costs and fees and currency exchange impact. The performances can be a gain or a loss depending on directional view of the trader with respect to the actual underlying movement. The information on the above is for illustrative purposes only, and is not indicative of future performance.

Compounding Effect

Investors that hold the DLCs for longer than one Trading Day will notice that the return could be more or less than the leverage factor that is embedded within the DLC. This is because the performances of the underlying asset and the DLCs are reset at the end of each Trading Day.

When markets open on the next day, the performances of the underlying asset and the DLCs will be measured from the intrinsic closing levels recorded on the previous Trading Day. What this means, in practice, is the performance each day is locked in, and any subsequent returns are on top of what was achieved the day before. This is a process referred to as 'compounding'.

The compounding effect can positively enhance returns in trending markets (upward or downward) whilst negatively impacting returns when the markets are more volatile or trend sideways for long periods. To learn more about the compounding effect and other features of the DLCs, click here.

DLCs offer a cheaper alternative to gain exposure to blue chip stocks

The Single Stock DLCs will be priced between S$0.25 to S$2.20 depending on the underlying stock. This means that investors can gain 5x leverage exposure to the underlying stock with a lower capital outlay.

Taking AIA for example and assuming AIA is currently at HKD75 (S$13), the investor would need capital of S$2,600 (S$13 x min lot size 200 units) to gain exposure to AIA as compared to a capital of S$80 (S$0.80 issue price of the AIA DLC x min lot size 100 units) if the investor uses the DLC.

In addition to a lower capital outlay, the intraday trading costs for DLCs is cheaper than trading the stock for an investor who wishes to gain S$10,000 worth of exposure to the underlying stock as highlighted in a previous market update here.

In comparison to other leveraged instrument such as Contract for Differences (CFDs), the trading commission charged by the broker for DLCs is on average lower than CFDs. Notably, the commission charge for the CFD is based on the entire contract value while that of the DLC is based on the amount of the DLC purchased (20% of contract value). The table below illustrates the comparison on commissions.

      
    
    DLC info
Investors should also read all listing documents provided by the issuer for other features such as the airbag mechanism, the risks and other information related to the product before trading the DLCs. The documents can be found under company information on SGX website or the Issuer’s website (dlc.socgen.com).

 

Specified Investment Products (SIPs)

Structured Warrants, Daily Leverage Certificates and synthetic ETFs are products with features that might be more complex in nature and are only suitable for investors who possess the investment knowledge of more complex products and have a high risk tolerance. Hence, all investors need to be qualified to trade in Specified Investment Products (“SIPs”) to be able to trade in these products. Speak to your broker to find out more on how you can qualify to trade SIPs.

Where can I find more information?



			Benefits of ETFs 

			
Educational videos (link)
				Full list of SGX listed ETFs (link)
			

			
			Trading Warrants

			
Educational videos (link)
				Investor guide (link)
			

			
			Trading DLCs

			
Factsheet (link)
				Investor guide (link)
			

		



Mark the Date, DLC Offering Expands on 26 February

Yangzijiang Shipbuilding

Mark the Date, DLC Offering Expands on 26 February