SMX to offer WTI futures when it launches

SMX to offer WTI futures when it launches

The soon-to-be launched commodity exchange said yesterday (Wednesday May 2) that it would offer the futures in US dollars with a contract size of 1,000 barrels.

Thomas McMahon, CEO, said the oil product would be “the first step towards establishing a broad base and multiple product facility for energy hedging, trading and investing from Singapore.”

This is the first product that SMX has confirmed it will launch.

McMahon said SMX had committed to offering WTI futures because of their importance in the region. “As one of the benchmarks used within the Asian business day, we see an opportunity to give the trading community in the region a choice for efficient use of collaterals in trading and clearing,” he said.

By listing WTI oil futures, SMX is taking on the market leader in the product, the former New York Mercantile Exchange – now part of CME Group. WTI futures are also traded in London at the US-owned ICE Futures Europe, formerly the International Petroleum Exchange.

McMahon said that as the Asia Pacific region now rivalled the historic commodity trading regions of the US and Europe, SMX hoped to facilitate that demand with its own products.

“As a widely accepted benchmark, we see the WTI as complementary to our broader product mix that is specific to the region,” the SMX CEO said. “In 2009, 6.2bn futures and derivative contracts were traded in Asia versus 6.3bn in other regions. Trading in Asia has been increasing at a very fast pace and we expect to see some of this flow coming to SMX. Our products have been designed to meet the specific investing and hedging needs of Asian trade flows with due consideration to trading during the Asian time zone. This will reflect more accurate pricing for the commodities in the region.”

SMX has yet to reveal whether it will offer any other products when it launches in August. It has been granted regulatory approval to offer 11 contracts. But McMahon said the bourse had finalised its product suite and would make announcements in the coming weeks.

The exchange said that when it completes its product suite, it will list about 30 products, including a “complete energy complex” to allow for “hedging and investment across the entire energy product supply chain”.

Colin Packham, Sydney cpackham@fow.com

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