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Hot stock: SGX shares sink to 2-month low after MSCI licence expiry announcement

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SGX was the most traded stock by value on the Singapore bourse by Wednesday afternoon, even though it had lifted its trading halt only during the midday break.

THE stock price of the Singapore Exchange (SGX) plunged on Wednesday after it announced that it would discontinue its MSCI equity index futures and options contracts, save for those under MSCI Singapore, when their licence agreements expire in February next year.

SGX fell 11.8 per cent or S$1.17 to S$8.73 as at 3.40pm on Wednesday, after 10.7 million shares changed hands.

This marks the lowest share price for the counter in two months. SGX shares traded at S$8.59 on March 24.  

It was the most traded stock by value on the Singapore bourse by Wednesday afternoon, even though it had lifted its trading halt only during the midday break.

According to Reuters, Wednesday's share price drop, if sustained, would be the counter's steepest daily percentage fall since 2008, though the price is roughly steady year to date.

SGX chief executive Loh Boon Chye said on Wednesday that SGX's move to discontinue the bulk of its MSCI equity index futures and options contracts could have a near-term impact on its equities derivatives open interest.

However, the bourse operator's multi-asset portfolio shelf has reached "a critical mass", he added.

SGX said it would continue to broaden and deepen coverage of Asia by developing more derivatives products on its own or in collaboration with partners.

On Wednesday, global index publisher MSCI also signed a licence agreement with Hong Kong Exchanges and Clearing (HKEX) to launch Asia and Emerging Markets futures and options contracts.

Under the agreement, HKEX unit Hong Kong Futures Exchange will receive a suite of MSCI equity indices on which it will base an initial 37 futures and options contracts.

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