Singapore Sees Surge in Japan Bond Futures Trading Amid Volatility

Trading in Japan bond futures at the Singapore Exchange (SGX) has surged due to rising volatility, drawing in global funds and relative-value traders. The daily average volume of 10-year Japanese government bond (JGB) futures has increased sixfold in 12 months, reaching 5,400 contracts in August.

This represents about 54 billion yen ($432.9 million) in notional value traded per day. According to William Chin, SGX's head of rates and derivatives, investors are attracted by the prospect of further Bank of Japan interest-rate hikes, inflation, and fiscal risks.

The yen's role as a global funding currency and Japanese investors' vast overseas holdings contribute to market volatility, creating trading opportunities. Trading volume surged to 9,000 contracts on one day last week, according to the SGX.