In a significant milestone, the Singapore Mercantile Exchange ("SMX" or the "Exchange") today announced that it has received in-principle regulatory clearance from the Monetary Authority of Singapore (MAS), the central bank of Singapore and regulator for its financial markets, to operate the first Pan-Asian multi-product commodity derivatives exchange.
SMX, the first such commodity derivatives exchange to be based in the region, will offer unrestricted cross-border trading to market participants in Asia and across the world. Using state-of-the-art electronic platform developed by Financial Technologies India Limited (Financial Technologies), participants will be able to trade products ranging from precious metals, base metals, energy, agriculture, currency pairs, and commodity indices to other exotic products.
Financial Technologies, a 100% shareholder of SMX has till date invested SGD 75 million in this critical venture. SMX has set up SMX Clearing Corporation (SMXCC), a wholly owned subsidiary to carry out the clearing and settlement functions and be the Central Counter Party for all trades done on SMX.
Welcoming this latest development, Mr Ang Swee Tian, Chairman of SMX, said: "This is a significant milestone for us, as we progress towards the launch of Asia's first multi-product commodity exchange. I believe that we have in place all the elements for a thriving commodity exchange based in Singapore."
Singapore is already a major trading hub - 3rd largest oil trading centre after New York and London, the top bunker port in the world, 5th largest foreign exchange trading centre and 8th largest centre for OTC derivatives. With the new commodities derivatives exchange in Singapore, another critical link of the ecosystem will be in place.
Mr Jignesh Shah, Vice Chairman of SMX, and Chairman and Group CEO of Financial Technologies, said, "It is the foresight and vision of the Singapore Government which has enabled Singapore to be among the top three international financial centres in the world today. We are thankful to the MAS for giving SMX the opportunity to enhance the existing financial ecosystem of Singapore."
Mr. Laurence O'Connell, Managing Director Asia Pacific operations for MF Global, said "As a world leader in execution and clearing services for exchange-traded as well as over-the-counter derivative products, we believe the SMX initiative will serve as an important market for commodities trading in the region and recognize Financial Technologies as a strong strategic partner in the industry."
With the current economic meltdown, the momentum has finally swung towards Asia. Singapore with its open economy is ideally suited to emerge as the topmost financial centre in the East.
Mr Thomas McMahon, CEO of SMX, said, "It is indeed an eventful and historic time for Asia and Singapore. Our customers want greater price transparency and to better manage their risk in the Asian trading hours. This is the main focus of SMX. In the meantime, SMX continues to work on satisfying MAS on an agreed set of conditions, so that it may commence operations in the new year."
SMX recently concluded successful testing of its electronic trading platform, risk management and clearing & settlement systems. The Exchange recently announced the appointments of Standard Chartered Bank and ICICI Bank as its settlement banks.