Singapore Exchange is inviting public feedback on the proposed contract specifications for the SGX Nikkei Stock Average Dividend Point Index Futures contract, which will be targeted for the derivatives market.

The Nikkei Dividend Index Futures is a standard, cash-settled futures contract based on the Nikkei Stock Average Dividend Point Index.

The index is calculated by Nikkei and is based on accumulated dividends received by investors of constituent companies of the Nikkei Stock Average over a calendar year.

In recent years, institutional investors have sought tools to manage and hedge dividend exposure. The proposed Nikkei Dividend Index Futures will provide investors with an exchange-traded instrument to do so.

Investors will be able to take a view on the value of the Nikkei Stock Average Dividend Point Index on expiry date. In addition, market participants can benefit from arbitrage opportunities related to dividend performance.

Subject to regulatory approval, SGX hopes to launch the proposed Nikkei Dividend Index Futures contract by the third quarter of 2010.