InterContinental Exchange Inc. (ICE) might launch a new iron
ore swaps futures contract in a bid to capture U.S.
participants affected by changes under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, market sources told
AMM sister publication Steel First.
"ICE admits that it cant
capture the Chinese market," an industry source said. "This
contract will appeal to U.S. customers (who are unable to)
trade with Singapore under the new rules."
An ICE spokeswoman declined to
comment on the rumors.
The Singapore Exchange (SGX),
which clears the bulk of iron ore derivatives contracts, has
yet to achieve Derivatives Clearing Organization status from
the U.S. Commodities and Futures Trading Commission.
Market sources said last week
that the SGX is looking to launch an iron ore swaps futures
contract in January in a bid to retain and attract U.S.
The SGXs new contract is
expected to be voice brokered and function almost exactly as
its current cash-settled swap product. The contract will be the
second iron ore futures contract traded in Singapore. The
Singapore Mercantile Exchange launched a screen-traded iron ore
futures contract in August 2011.
The new rules have prompted U.S.
exchanges to launch contracts and offer incentives in an
attempt to claim an increased share of the rapidly growing iron
ore derivatives market.
On Nov. 21, CME Group Inc.
announced a fee holiday for five ferrous derivatives contracts
in a bid to attract further liquidity to the exchange.
CME Groups established
presence in Asia means that it poses a greater threat to the
SGX contract than any iron ore swaps futures launched by ICE,
ICE already offers a cleared OTC
iron ore swaps product based on the Platts 62-percent iron ore
c.f.r. China index, which it launched in 2009. The exchange
plans to launch a physical iron ore trading platform in
The new iron ore swaps futures
contract will be based on Platts steel index.
A version of this article was
first published by AMM sister publication Steel First.