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New commodities bourse to open in Singapore

Analysis

India’s Financial Technologies Group, operator of India’s top commodities bourse, plans to launch a similar exchange in Singapore early next year, it said on Wednesday.

The Singapore Mercantile Exchange will provide a platform for futures and options trading on precious metals, base metals, energy, agricultural commodities, currency pairs, carbon credits and commodity indices, the group said in a statement. It wasn’t immediately clear how the exchange would operate. “We have our own clearing house, the Singapore Mercantile Exchange Clearing Corporation,” a spokeswoman at SMX said, but was unable to give further details. “What will be very interesting will be to see as a pan-Asian exchange, in which currency these contracts will denominated. It doesn’t seem to make a lot of sense to use the dollar,” an executive with a futures commission merchant in Singapore who attended the event where the exchange was launched said.

Industry watchers said the exchange was likely to operate in a similar way to India’s Multi Commodities Exchange, where Financial Technology (India) Ltd, the group’s flagship listed company, owns a 32% stake. But the market would need a lot more information before embracing the new trading venue, they said. “Anyone wanting to trade on this would need to do a ton of due diligence,” a source at an international investment bank said. “The regulatory framework is probably more attractive here than say India. But first we will need a lot more information.”

In February, Financial Technologies said its Multi Commodity Exchange of India had filed an offer document with the market regulator for an initial public offer. Around that time NYSE Euronext bought a 5% stake in the Multi Commodity Exchange for $55 million. (Reuters)

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