SGX Broadens Clearing Services for OTC Customers

Singapore Exchange (SGX) is providing international customers from 25 February 2013, the choice of clearing OTC (over the counter) transactions as swaps or futures contracts, the bourse operator said Wednesday, broadening access to Asian OTC commodity and financial derivatives markets.

The company said SGX AsiaClear will offer a suite of futures contracts called AsiaClear Futures, starting with Iron Ore, Freight and Oil, which is fully fungible with bilateral swaps currently cleared by the exchange. International customers, including US customers, will be able to meet their risk management needs with swaps and/or futures in SGX AsiaClear.

With an open and robust clearing infrastructure for fully fungible products, the convergence of liquidity in a single clearing venue is expected to avert price fragmentation and will promote secure and efficient risk transfer.

“We are committed to helping our customers throughout Asia, Europe and the US navigate the complexity of rapidly evolving risk management and regulatory requirements. Customers using our unique SGX AsiaClear service are free to choose transaction modes which best fit their needs while clearing through a single venue,” said Michael Syn, Head of Derivatives at SGX.

As Asia’s leading multi-asset OTC clearing house, SGX AsiaClear volume has exceeded US$300 billion since its launch.

In 2012, a record 108.9 million tonnes of iron ore swaps were cleared in SGX AsiaClear, 2.5 times that of the previous year. Over 90 per cent of the world’s cleared iron ore swaps are cleared through SGX AsiaClear.

SGX AsiaClear said it intends to expand its clearing services from the current commodity and financial products to Asian OTC equity derivatives as customer needs develop.

John Banaszkiewicz, Managing Director of Freight Investor Services (FIS), a leading broker in global commodities, said “FIS has always been a passionate advocate of bringing new products and trading opportunities to the market. We welcome SGX’s move to facilitate customers from different jurisdictions to continue to trade and tap on its fast growing liquidity pool in Iron Ore swaps and other products.”