(EnergyAsia, September 9, Wednesday) — Singapore Exchange Limited (SGX) is inviting public comments on the proposed contract specifications of its proposed fuel oil 380-centistoke futures contract to be launched on its derivatives market.

The proposed FO 380 contract will be traded in units of 100 tonnes per lot and is physically deliverable at exchange-designated installations. At present, all these installations are located in Singapore.

The proposal includes consequential amendments to SGX futures trading rules and clearing rules.

The key features of the contract that relate to physical delivery are:

1. Delivery facilitated by the clearing house which will match buyers and sellers after taking into account the quantity, installations for delivery, delivery dates and methods of delivery to the extent reasonably possible. The minimum size for delivery will be 2,000 tonnes.

2. Performance Deposit and Security. To ensure that buyers and sellers fulfil their delivery obligations, buyers and sellers will post a performance deposit (PD) with the clearing house. Upon delivery by the seller, the clearing house will require a security from the seller for application in the event of any disputes arising from the fuel oil delivered.

3. Performance Guarantee. The buyer’s and seller’s respective clearing members will guarantee the performance of payment and delivery obligations in accordance with the SGX clearing rules and specifications.

4. Use of Letters of Credit. Letters of credit may be used for the posting of PD and payment. The consultation paper, which explains the rationale and proposed amendments in detail, will be available on SGX website at www.sgx.com from today.

Market participants and members of the public can forward their feedback and suggestions on the above proposed amendments until September 17.