ASIA GENERALLY WELCOMES U.S. NIGHT FUTURES TRADING
Traders in financial centres in Asia
generally welcomed the first U.S. Night session of futures
trading which starts in Chicago on April 30.
    Traders in Japan, Sydney and Hong Kong said they expected
the move to bring benefits, but traders and bankers in
Singapore said it posed a serious threat to the Singapore
International Monetary Exchange (SIMEX).
    The Commodity Futures Trading Commission (CFTC) in
Washington gave unanimous approval to the Chicago Board of
Trade's (CBT) proposals on Tuesday.
    The CBT plans to offer futures on U.S. Treasury notes and
bonds, and options on those futures, from 1800 to 2100 hrs
Chicago time (2300 to 0200 gmt) on Mondays to Thursdays.
    The sessions would mark the start of the trading day, which
would end at the present close of business the next day.
    The proposed hours are designed to coincide with the
busiest morning trading hours in Japan.
    But Andrea Corcoran, chief of CFTC's division of trading
and markets, said on Tuesday she expected the evening sessions
to attract primarily U.S. Firms looking for additional
overnight protection.
    Traders in Tokyo said the night sessions were expected to
help expand U.S. Treasury bond trading volume and enlarge daily
fluctuation ranges in Tokyo.
    They said Japanese financial institutions were very
interested in using overseas futures markets, but were waiting
for finance ministry approval to do so. Approval is expected
before the end of the month.
    The foreign branches of financial institutions can already
trade futures, but in practice make little use of them.
    But, traders said the timing of the launch was poor, as it
is in a ten day period when Tokyo has three public holidays.
    The Tokyo traders said because of the holidays little
interest in night trading could be expected until after May 5.
    Tokyo bond managers said also that participation could be
limited by a lack of experienced futures traders in Tokyo.
    The Sydney Futures Exchange (SFE) hoped the four-hour
trading overlap with the new CBT hours would boost activity in
Sydney's eurodollar and U.S. Treasury bond contracts, spokesman
Stephen Calder said.
    The eurodollar contracts are linked to the London
International Financial Futures Exchange (LIFFE).
    Calder said turnover in both contracts had been
disappointingly low since they were introduced last October.
    He said the CBT move would broaden arbitraging
opportunities for SFE traders.
    "With a late evening lead from Chicago, there's also more
chance that people will deal here in the afternoon," he said.
    But in Singapore news of the CBT move was not welcomed.
    A senior executive of a Japanese securities firm operating
in Singapore told Reuters: "Expanding global links between
futures markets mean that SIMEX must add Chicago and London and
Sydney to its list of rivals."
    "LIFFE could cut further into the SIMEX contract, with a U.S
treasury bond contract that can be off-set on the CBOT," the
Singapore-based Japanese trader said.
    Such a contract is expected later this year, he said.
    Other SIMEX traders said local interest in the Sydney
treasury bond contract might be boosted if the Sydney exchange
established a three-way link with Chicago and London. LIFFE has
signed a memorandum of understanding with CBOT for such a link.
    "If this link-up materializes, most traders are likely to
by-pass SIMEX," said one trader.
    Hong Kong commodity traders welcomed the CFTC's decision,
though they added that local investors would have been more
interested in financial futures.
    "I think it is very good, because the move will help us to
increase our market share here," said Joseph Tan, manager of
<Bache Securities (HK) Ltd>.
    He said that Bache, like many other local units of U.S.
Commodity houses, had been participating in Chicago's rregular
hours of trading for a long time and would like to extend its
business.
    Local Hong Kong houses also welcomed the move, but a
spokesman for Shun Loong Co said investors would be more
interested if stock index or currency futures were available.
    Futures contracts in the local Hang Seng index have become
increasingly popular since they were introduced to the market
in May 1986.
 (See ECRA for Spotlight Index)
 REUTER
