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.