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Enhanced product offering

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Enhanced product offering

To further expand our range of tradeable assets, Starfish FX has managed to secure liquidity from the exchange for two exciting new products – Multi Asset derivatives as well as restructured Short Term derivatives to complement the expiry timeframes currently available.

The addition of these products will largely expand the scope and depth of market fundamentals and price volatilities that traders can effectively monetize. The contrasting characteristics of these two types of derivatives will also present opportunities for both long and short term strategies, creating a more holistic and comprehensive environment for traders of different styles to excel.

1) Introduction of Multi Asset derivatives

There are various characteristics of Multi Asset derivatives that are advantageous to traders. Firstly, single asset risk is mitigated through diversification of an asset basket. The nature of such a broad based derivatives would also almost certainly increase the availability of liquidity for short term derivatives. Similarly, greater volatility which translates to more trading opportunities can also be expected as a wider range of market fundamentals will affect the multiple underlying assets as opposed to a single asset derivatives.

Geographical based Multi Asset derivatives

These Multi Asset derivatives are a hybrid between index derivatives and currency derivatives and comprises of a weighted basket of underlying assets categorized by geographic regions.

  • ASIA PACIFIC Index
  • An Asian orientated index with main exposure to Japan and China coupled with diversification in the pacific rim. Underlying assets that make up the index include the major currencies Yen (JPY), Australian Dollar (AUD) and New Zealand (NZD) dollar as well as major indices HIS (Han Seng), SSEC (Shanghai Composite) and N225 (Nikkei 225).

  • EUROPE Index
  • The Europe Index emphasizes on the region’s larger and more developed markets which include Germany, France, Switzerland and Britain. Underlying assets that make up the index include the major currencies Euro Dollar (EUR), British Pound (GBP), Swiss Franc (CHF) as well as major indices DAX (Frankfurt Stock Exchange) , FTSE (London Stock Exchange), SMI (Swiss Stock Exchange) and CAC 40 (pan-European stock exchange) .

  • AMERICAS Index
  • A unique composite of north and south American assets with main exposure on the United states of America, Canada, Brazil and Argentina. Underlying assets that make up the index include the major currencies US Dollar (USD), Canadian Dollar (CAD) as well as major indices MerVal (Buenos Aires Stock Exchange) , BVSP (BM&F Bovespa Stock exchange), S&P TSX Composite (Toronto Stock Exchange), DJI (Dow Jones), NASDAQ Composite and S&P 500 Index.

    Industry/Class based Multi Asset derivatives

    These indices share a common characteristic of providing a broad overview of the respective industries and asset class.

  • METALS Index
  • Designed for traders to gain direct exposure to the metals market, the METALS Index comprises of both base metals and precious metals weighted based on global production volume and trade liquidity averaged over the preceding five-year period. For the base metals component, the six primary non-ferrous constituent metals are Aluminium (99.5% purity) , Copper (Grade A Cathode), Lead (99.97% purity), Nickel (Melting Grade), Tin (99.85% purity) and Zinc (99.995% purity). The precious metals component consists of Gold (XAU), Silver (XAG), Platinum (XPT) and Palladium (XPD). Underlying assets are U.S. dollar denominated and corresponding unit of measurement per contract for all precious metals are troy ounce (t oz) and metric ton (MT) for all base metals except copper which is in pounds (lb).

  • COMMODITIES Index
  • The COMMODITIES Index offers traders significant global exposure to the two principal commodity groups – Energy and Agriculture. Covering wide spectrums of the commodity sector, the COMMODITIES Index emphasizes diversification and liquidity. Individual asset weightage is determined by its liquidity and production data in a 2:1 ratio subjected to further requirements for diversification. Underlying assets of the main sector “Energy” group includes WTI Crude Oil, Brent Crude Oil , Unleaded Gasoline and Natural Gas. The “Agriculture” group is further diversified into the sub sectors “Grains” and “Softs”. Components of “Grains” include Corn, Soya bean and Wheat, whereas components of “Softs” include Cotton, Sugar and Cocoa. Index is calculated in U.S. dollar denominated terms.

  • EXOTICS Index
  • The EXOTICS Index provide traders the rare opportunity to trade on some of the most highly volatile currencies in the world without exposure to excessive risks and illiquid market conditions that are otherwise often associated with exotic currencies. The consolidated liquidity of a broad based basket provides for greater activity and fluctuations necessary for profit yields and couples as a portfolio diversification to that of major currencies trading. Exotic currencies in the basket represent emerging or strong but smaller economies on a global perspective from Asia, Middle East, Africa and European countries outside of the Euro Zone. Underlying Assets include Turkish Lira (TRY), Swedish Krona (SEK), Norwegian Krone (NOK), Danish Krone (DKK), South African Rand (ZAR), Saudi Riyal (SAR), Hong Kong Dollar (HKD), Singapore Dollar (SGD), Offshore Chinese Yuan (CNH) and Indian Rupee (INR).

    Currency Strength based Multi Asset derivatives

    Currency Strength Indices measures the value of an underlying currency relative to other major currencies using a pre-defined currency basket. It is a reflection of many factors related to the underlying currency including fundamental data, overall economic performance and interest rates. Currency Strength Indices grants traders huge exposure to the predominant trend of the underlying currency. A rising index indicates an appreciation of the underlying currency against the counterpart currencies in the currency basket, a falling index in contrast, indicates a devaluation.

    The Currency Strength indices are weighted using data from the Bank for International Settlements (BIS) on total foreign exchange (FX) trading volume. The BIS is a supranational organization of central banks that provides triennial data, allowing for continually updated indices. The Currency Strength Indices derivatives offered are based on the world’s most liquid currencies which represent more than 90% of the averaged $5.1 trillion USD daily turnover volume.

    1) USDOLLAR Index (USDbo)
    The US dollar accounted for more than 87% of all foreign exchange market turnover. Counter Currencies in the basket consists of the Euro Dollar (EUR), Australian dollar (AUD), British Pound (GBP), New Zealand Dollar (NZD), Canadian Dollar (CAD), Swiss Franc (CHF) and Japanese Yen (JPY).

    2) EURODOLLAR Index (EURbo)
    The Euro dollar accounted for more than 31% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), British Pound (GBP), Swiss Franc (CHF) and Japanese Yen (JPY).

    3) YEN Index (JPYbo)
    The Japanese Yen accounted for more than 21% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), Euro Dollar (EUR), Australian Dollar (AUD), British Pound (GBP), Swiss Franc (CHF) and New Zealand Dollar (NZD).

    4) POUND Index (GBPbo)
    The British Pound accounted for more than 12% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), Euro Dollar (EUR), Swiss Franc (CHF) and Japanese Yen (JPY).

    5) AUDDOLLAR Index (AUDbo)
    The Australian Dollar accounted for close to 7% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), Canadian Dollar (CAD), Japanese Yen (JPY) and New Zealand Dollar (NZD).

    6) CADDOLLAR Index (CADbo)
    The Canadian Dollar accounted for more than 5% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), Australian Dollar (AUD), Swiss Franc (CHF) and New Zealand Dollar (NZD).

    7) FRANC Index (CHFbo)
    The Swiss Franc accounted for close to 5% of all foreign exchange market turnover. Counter Currencies in the basket consists of the US Dollar (USD), Euro Dollar (EUR), British Pound (GBP), Canadian Dollar (CAD) and Japanese Yen (JPY).

    Note: All turnover percentages have been adjusted for local and cross-border inter-dealer double-counting as 2 currencies are involved in every transaction.

    2) Restructured Short Term derivatives

    Statistical data shows for a fact that during periods of low volatility, the absence of M1 and M5 derivatives are a regular phenomenon. This is due to limited liquidity for short term derivatives contracts to be readily fulfilled during the above-mentioned market conditions. Thus, traders may find certain periods of the day to be lack of opportunities especially for those who exercise short term strategies.

    The perfect fill for this void in our product offering would be the addition of restructured short term derivatives. The following two such derivatives are now available to give traders greater trading choices :

    1) 200 seconds derivatives
    2) 400 seconds derivatives

    These derivatives are designed based on historical reference of aggregate demand and supply during low volatility periods. Increasing timeframe from 60seconds to 200seconds is a consolidation of liquidity. This consolidation of M1 and M5 liquidity can then be adequately distributed under a restructured expiration window of 200 and 400seconds to increase the overall availability of short term derivatives. During periods of high volatility, these restructured short term derivatives will still be available alongside the existing M1 and M5 short term derivatives and present even more opportunities for all traders.

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