Singapore to Trade China ADRs

Singapore

Singapore Stock Exchange plans to launch exchange trading of Asian companies’ American Depository Receipts (ADRs) in coming months in an effort to attract new investors and boost trading volumes, sources said on Wednesday.

SGX, Asia’s second-most valuable exchange, plans to start with popular ADRs of Chinese firms before broadening the list to Indian companies, two sources Reuters reported today.

The preliminary list of ADRs includes those of U.S.-listed Chinese stocks such as NetEase.com (NTES), Shanda Interactive (SNDA) and Baidu (BIDU), according to a draft SGX factsheet seen by Reuters.

Other ADRs on the list are Suntech Power (STP), CTrip.com International (CTRP), Aluminum Corporation of China (ACH) and Home Inns & Hotels Management (HMIN).

The plan to quote the ADRs on SGX is subject to regulatory approval, the factsheet said.

“It’s something we are working on but we are not able to share at this stage,” an SGX spokeswoman said.

SGX probably expects to get approval in the next month or two since it has published and distributed draft factsheets, one of the sources said.

SGX has been developing and introducing new products in a bid to narrow the gap with rival Hong Kong Exchanges and Clearing (0038.HK), which attracts many big listings from China and led the world in initial public offerings last year.

SGX CEO Magnus Bocker told reporters on the sidelines of a fund management conference on Wednesday the Singapore bourse is looking at new product offerings such as equity derivatives, gold and other soft commodities, and contracts related to fuel oil.

SGX also hopes to clear more trades that currently take place over-the-counter, he said, as governments and investors demand greater transparency and lower settlement risk for trades that take place outside regulated exchanges.

According to the draft SGX factsheet, people who trade the planned ADRs will be able to keep them in Singapore’s central depositary, lowering costs for retail investors.

The planned ADRs will trade on SGX during normal Asian hours and are transferable between depositary accounts in the United States and Singapore, giving investors the ability to trade the ADRs around the clock.

Shayne Heffernan www.livetradingnews.com