A stock index is a performance benchmark of a stock market. It measures the performance of a selected basket of stocks which represents the performance of the whole stock market. Index futures replicate the performance of an underlying stock market index and double as hedging and trading instruments which help to protect the investor against, or profit from, stock market fluctuations without having to change his actual dollar investment in stocks. Simply put, an index represents a "basket" or portfolio of stocks or commodities.
Stock Index Futures offer investment opportunities for individual investors who wish to capitalise on broad market movements in the regional and international stock markets.
Well-established global indices we offer include:
Why trade Stock Index Futures?
- Flexibility of buying or selling first (shorting)
- Hedge stock portfolio from falling prices
- Diversification of risks spread over a basket of stocks
- Substantial liquidity in terms of large open interest, volume and tight bid/offer spreads
- Online access to global futures exchanges and virtually around-the-clock trading throughout the week
- Leverage* trading on margin
- Small investment outlay
- Broad market exposure to the specific country’s stock market
- Alternative investment in a stock market
* In leveraged trading, the investor may sustain losses in excess of his initial funds and may be called upon to deposit additional margin funds at short notice.
Differences between trading Stock Index Futures and Stock Indexes
| Stock Index Futures | Stocks | |
|---|---|---|
| Underlying | Cash index | Ownership of shares in a company |
| Settlement | Daily Mark-to-market | Fixed settlement |
| Risk | Leverage can magnify gains as well as losses by several fold | |
| Short Selling | No uptick rule No borrowing of shares |
Uptick rule Short seller borrows shares and must pay dividends to owner of shares (long) |
| No dividends on futures | dividends to owner of shares (long) |
Contact Us
Marketing Desk—General and Product Enquiry
Phone: (65) 6538 0500
Fax: (65) 65367367
Email: futures@phillip.com.sg
What Stock Index Futures Contracts are available for trading?
