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China driving iron ore futures screen trading: CME

Keywords: Tags  CME Group, iron ore futures, screen trading, Martin Evans, Globex, electronic trading, Singapore Exchange, Singapore Mercantile Exchange


LONDON — Growing Chinese interest in the ferrous derivatives arena is driving iron ore futures screen trading, Martin Evans, CME Group Inc.’s director of metals products, told AMM sister publication Steel First in an interview May 16.

CME Group launched an iron ore futures contract on its Globex electronic trading platform May 12, with five contracts trading since then.

"We are seeing growing interest in trading from the Chinese market," Evans said. "They want to see pricing happening on a screen."

Chinese market participants across the supply chain, from steel mills to individual traders, are looking to enter the ferrous derivatives market.

CME Group, the largest operator of U.S. futures exchanges, has made the transition to Globex for iron ore futures in response to feedback from the Chinese market, Evans said.

"To grow this market, you need to meet the needs of new trading partners," he said, adding that the move would promote liquidity in the Asian markets and among U.S. and European funds and private equity market participants.

The iron ore derivatives arena has largely been a voice-brokered market since it launched in 2008, although some major brokerages, such as GFI Group Inc., New York, have their own in-house electronic trading screens.

The Singapore Mercantile Exchange (SMX) launched a screen-traded iron ore futures contract in 2011, but it failed to gain traction compared with the cleared iron ore swaps contract offered by the Singapore Exchange (SGX), which clears around 90 percent of globally traded iron ore swaps.

Volumes of iron ore derivatives cleared by the SGX have rocketed to an average of more than 16 million tonnes per month in the first four months of this year.

A version of this article was first published by AMM sister publication Steel First.


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