(EnergyAsia, September 30) — Singapore Exchange (SGX) President Ang Swee Tian spoke on the over-the-counter clearing (OTC) service for commodities trade at its special lunch for oil traders.

“In June, we announced plans to develop a clearing facility for OTC traded energy derivatives and FFAs market. This strategic initiative was taken in response to market demand, and to help reinforce Singapore’s development as an oil trading hub and international maritime centre in Asia.


“SGX started the first financial futures market in Asia in 1984 and has therefore more than 20 years of experience in clearing derivatives transactions. Regulated by the Monetary Authority of Singapore (MAS), we have a well-established clearing house with very strong financial backing. We believe we can add value to the OTC energy and FFA market by playing this clearing role as an Asian central counterparty. Together with our clearing members, our physical presence in Asia will allow us to provide the convenience of service immediacy and efficiency in the Asia-Pacific time zone.


“Since our announcement, our OTC clearing team has conducted round table discussions and meetings with various oil and FFA market participants, voice brokers and SGX clearing members. I am pleased to say that the responses received thus far have been very encouraging, and we are on schedule to offer the OTC clearing facility in first quarter next year.


“Oil trading and shipping companies see the benefits of SGX playing the role of central counterparty to reduce their counterparty risk exposure and to increase the efficiency that clearing brings by facilitating position netting, trade processing and settlement.


“Voice brokers have indicated support in this OTC clearing initiative as they believe a central clearing facility will help to bring in more counterparties for them to match trades, and hence, increase liquidity in the market place.


“We are also very happy to have received support from our existing clearing members who are keen to partner with the OTC players in providing post-trade clearing services. To-date, 10 SGX clearing members who are well-established financial institutions have signed up as the pioneer batch of SGX OTC Clearing Members.


“They are ABN AMRO Futures (Singapore) Ltd, Barclays Capital Futures (Singapore) Pte Ltd, DBS Vickers Securities (Singapore) Pte Ltd, Fimat Singapore Pte Ltd, Fortis Clearing Singapore Pte Ltd, Goldman Sachs Futures Pte Ltd, HSBC Futures (Singapore) Pte Ltd, Mizuho Futures (Singapore) Pte Ltd, Refco Singapore Pte Ltd and UOB Bullion & Futures Ltd.


“With the encouragement from our Singapore government authorities, SGX and our clearing members look forward to partnering with you and other participants in the OTC market for a successful launch of OTC clearing facility.”