Singapore Exchange (SGX) will start trading its new Fuel Oil 380-centistoke futures contract (FO 380 Contract) on Monday, 22 February 2010.
“The launch of our Fuel Oil futures contract will put SGX closer to becoming Asia’s commodity futures trading hub. The new contract provides our global participants an attractive price discovery and hedging product. This launch is timely and will bolster Singapore’s position as a commodities trading and clearing gateway,” said Mr Magnus Bocker, Chief Executive Officer of SGX.
The new contract is based on Residual Marine Grade 380 ISO 8217, primarily bunker fuel oil supplied to ships. Physical delivery will be via Free-On-Board or inter-tank transfer at Exchange-designated Singapore oil installations. The minimum tradable contract size is 100 metric tonnes per lot and the minimum deliverable size is 2,000 metric tonnes or 20 lots. Market markers and liquidity providers will be available for this contract.
The trading session for the new contract starts from Singapore time 9.30am to 6.30pm (T-session) followed by 7.30pm to 1.00am (T+1 session). The extended trading hours provides participants, such as shipping companies, bunker suppliers and oil trading companies, an efficient and transparent pricing mechanism for the Singapore fuel oil market from Asia open to Europe close.
With Singapore’s status as the world’s largest bunkering port and the world’s third largest oil trading hub, this new contract will further enhance the city-state’s attraction as an international oil pricing centre.
Mr Chong Lit Cheong, Chief Executive Officer of International Enterprise Singapore said, “Singapore has been one of the leading physical commodities trading hub in Asia Pacific, in particular for the oil trading sector. The launch of SGX’s FO 380 contract will undoubtedly further strengthen our value proposition to the global oil trading community. We are supportive of such market initiatives as they provide long-term solutions for risk management and greater pricing transparency.”
Mr Lam Yi Young, Chief Executive of Maritime and Port of Authority of Singapore (MPA) said, "SGX’s fuel oil futures contract will encourage greater participation in Singapore’s marine fuel market from both local and international shipping and bunkering communities. This complements Singapore’s position as a top bunkering port and is in line with MPA’s effort to develop a conducive and progressive environment for the bunkering industry."