LONDON The Singapore Exchange (SGX) plans to launch an
iron ore futures contract in January as the United States
tightens its over-the-counter (OTC) trading rules, market
sources told AMM sister publication Steel First.
The SGX is the OTC iron ore markets most popular clearing
venue, but isnt yet registered with the U.S. Commodities
Futures Trading Commission (CFTC) as a derivatives clearing
organization, meaning U.S. companies wont be able to
trade on the exchange when the new rules come into effect.
The launch of a futures contract would mean that the SGX would
be able to retain U.S. market participants, who make up around
10 percent of the OTC iron ore market.
SGX is working closely with the (CFTC) to secure
recognition as a registered derivatives clearing
organization, SGX head of derivatives Michael Syn said
Friday, adding that it is working with regulators to deliver
innovative products to customers from different
regulatory regimes. He didnt give details of any contract
specifications or launch dates.
Under CFTC rules, clearinghouses that clear OTC products for
U.S. clients must be registered with the regulator as a
derivatives clearing organization.
The new rules are part of Washingtons Dodd-Frank Wall
Street Reform and Consumer Protection Act, a regulatory
clampdown on derivatives tradingincluding the
$640-trillion OTC marketthat is intended to prevent the
collapse of major financial institutions in the wake of the
2008 global economic collapse.
A version of this article was first published by AMM sister
publication Steel First.