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‘X’ marks the spot for synthetic ETFs on SGX

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In an effort to make it easier for investors to differentiate between direct replication ETFs and synthetic replication ETFs, the Singapore Stock Exchange (SGX) has arranged for the trading name of all of the latter to be tagged with an ‘X’, which appears next to the ‘@’ used to mark Specified Investment Products (SIPs).

The move is designed to improve the visibility of all the synthetic replication ETFs on trading screens and the SGX live prices website and is part of SGX’s overall effort aimed at equipping investors with the requisite knowledge to bring about informed investment decision. 

In July, the Exchange introduced two online initiatives, “Customer Account Review Module” and “SGX Online Education programme”, to support retail investors in their understanding and trading of SIPs listed on SGX. SGX began working on these initiatives last year, in response to the Monetary Authority of Singapore’s (MAS) proposal to enhance safeguards for retail investors for SIPs.

Retail investors can only trade SIPs (which includes ETFs) only after they are assessed by the broking firms as having the relevant knowledge and experience to understand the risks and features of SIPs. The SGX Online Education Programme, in particular, also dedicates a module to educating investors on ETFs.
 

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