not be proportional to the contract value. Instead, it
will be a flat fee per contract for a round trip. There is
no doubt that the actual cost figure will be significantly
lower than the commissions and clearing fees incurred for
SES stock trading.
Finally, with the low required capital and transaction
costs, an investor can get in and out of the market easily
and cheaply. If there is good liquidity of SiMSCI Futures to
start with, a virtuous circle can set in to draw in more
hedgers and speculators, leading to even lower transaction
costs and higher liquidity.
(Part two of two)
(The writer is Senior Lecturer of the Department of Finance
and Accounting, NUS & a resource panellist of SPH's Chinese
Newspapers.)
