Singapore Mercantile Exchange

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Singapore Mercantile Exchange
SMX logo.gif
Founded Opened August 2010
Headquarters Singapore
Key People [
Products Futures and options contracts in commodities including precious metals, base metals, agricultural commodities, currency pairs and commodity indices
Website www.smx.com.sg

The former Singapore Mercantile Exchange (SMX) is a division of the IntercontinentalExchange Group Inc. and was renamed ICE Futures Singapore in 2013.

The exchange, a pan-Asian multi-product currency and commodity derivatives launched on August 31, 2010 was shut down by ICE and relaunched as ICE Futures Singapore in November 2015, initially listing five products, crude oil, gasoil, gold and two Renmimbi futures.[1] [2]

SMX opened with euro-denominated futures contracts on Brent crude and West Texas Intermediate crude (WTI) oil contracts, as well as currency futures on the euro-U.S. dollar, and gold futures. It now hosts trading on a diversified basket of commodities including futures and options contracts on precious metals, base metals, agricultural commodities, energy, currencies and indices.

SMX is backed by Financial Technologies (India) Limited, which has established and currently manages 10 exchanges in India, Dubai, Singapore, Africa, Mauritius and Bahrain.

SMX is a member of international derivatives industry associations such as the Futures Industry Association (FIA), the Swiss Futures and Options Association (SFOA), the Association of Futures Markets (AFM) and the Futures and Options Association (FOA).

SMX was acquired by the Intercontinental Exchange (ICE) on Feb. 2, 2014.[3] The acquisition marked the first time a western bourse has set up infrastructure in Singapore.[4] The acquisition also included the SMX Clearing Corporation (SMXCC), a subsidiary of SMX and the clearing house for SMX trades.[5][6] The exchange and clearing house are expected to transition to the ICE trading and clearing platforms in the second half of 2014. [7]

History

The establishment of the exchange was announced at the Global Financial Market Summit 2008 in Singapore on July 9, 2008 (see Global Financial Market Summit 2008 Video).[8] The announcement came in a ceremony by Jignesh Shah, chairman and CEO of Financial Technologies along with Minister For Trade & Industry and Deputy Chairman, Monetary Authority of Singapore Lim Hng Kiang, former president of the Singapore Exchange (SGX) Ang Swee Tian and Chairman Emeritus of the CME Group (CME), Leo Melamed.[9]

Melamed was named chairman of the advisory board of the newly announced Singapore Mercantile Exchange [10] at the July 9 ceremony.[11] In the first week of August of 2008 Melamed resigned from that position amid claims he had not received approval from the CME Group's general counsel to accept the position.[12]

The Singapore Exchange and Chicago Board of Trade launched a derivatives market for Asia-based commodities in September of 2006, but it was discontinued late the following year.[13]

In April of 2009, SMX announced Thomas McMahon had been named SMX president. McMahon had previously been president of the Hong Kong Mercantile Exchange.[14]

The exchange was reported to have an initial capitalization of 50 million Singapore dollars (US$ 37 million). [15]

Tokyo Commodity Exchange (TOCOM) and SMX in April 2010 signed a memorandum of understanding (MoU) to explore co-operation and partnership mutually beneficial for both exchanges and market reach expansion.[16] Under the terms of the MoU, both parties will work together with a view to explore mechanisms to enhance market liquidity and system efficiencies within each exchange, including the joint development of new business opportunities.

SMX announced in mid-May 2010 that it had appointed Royal Bank of Scotland (RBS) as its settlement bank three months prior to its scheduled launch in August 2010.[17] SMX will work mostly with RBS Global Transaction Services (GTS) in cash management, trade services and commercial cards through its global partner network. SMX had already signed Standard Chartered Bank and ICICI Bank to settlement bank partnership deals. SMX will conduct conformance testing with settlement banks and other technology partners in advance of its scheduled launch date.

In July 2010, the exchange said it will launch Euro-US Dollar futures contracts when trading goes live in August 2010, a product the exchange says will position it to take advantage of an increasing global shift in foreign exchange trading from over-the-counter to exchange-traded derivatives with central counterparty clearing.[18]

In August 2010, the exchange commenced trading of gold futures, West Texas Intermediate crude oil and eurodollar futures contracts on August 31. [19] Late in August 2010, SME Chief Executive Thomas McMahon identified 34 contracts that it plans to launch over an 18-24-month period. The offerings will be broadly based across energy, agriculture, base metals, precious metals, options and over-the-counter instruments, McMahon told reporters. [20]

On August 12, 2010, SMX announced that the Monetary Authority of Singapore (MAS) granted 'Approved Exchange' (AE) status to SMX, the final approval needed to operate as a regulated and licensed exchange. SMX is currently the first pan-Asian multi-product commodity and currency derivatives exchange.[21]

On August 31, 2010, the Singapore Mercantile Exchange launched with contracts for gold, crude oil and EUR/USD currency futures. [22] SMX is competing for market share with the Singapore Exchange who also announced on August 31 that they would be introducing base metals futures contracts in a joint venture with the London Metal Exchange.

Products and Services

SMX offers market participants clearing and settlement through its clearing house, the Singapore Mercantile Exchange Clearing Corporation. The regulator of Singapore's financial markets - the Monetary Authority of Singapore (MAS) - had given it in-principle approval in 2009.

SMX is owned Financial Technologies, a $1.84 billion (as of 31st March 2008) player in creating and operating technology-centric financial markets in the Middle East and India.

Dealers, brokers and their customers connect to SMX's trading platform through a number of connectivity options, including leased lines, dial-up, multi-protocol label switching and the Internet either with a front-end provided by the SMX or a front-end developed by independent software vendor (ISV).

On SMX's platform, the best buy order will be matched with the best sell order based on a price-time priority.

Latest News

On February 1, 2012, the Singapore Mercantile Exchange announced the introduction of a new spread contract based on copper.[23] The contract would enable a member to execute two simultaneous trades in two different maturity contracts of the same commodity, by entering a single order. This would allow a member to take two separate positions, one in the near month and the other in the far month, while only entering one order. The spread contracts become available February 13, 2012, and are based on SMCOPPERCH - the most liquid commodities contract on the SMX platform.

References

  1. ICE Futures Singapore Launches with Commodity and FX Contracts Serving Asian Markets. Press Release.
  2. SINGAPORE MERCANTILE EXCHANGE (SMX) GOES „LIVE‟. SMX.
  3. ICE completes acquisition of Singapore Mercantile Exchange. Finextra.
  4. SGX and ICE signal hopes for closer ties. The Financial Times.
  5. Exchange-to-Acquire-Singapore-Mercantile-Exchange-Broadens-Exchange-and-Clearing-Operations-to-Asian-Markets-and-Customers/default.aspx Intercontinental Exchange to Acquire Singapore Mercantile Exchange; Broadens Exchange and Clearing Operations to Asian Markets and Customers. ICE.
  6. ICE completes acquisition of Singapore Mercantile Exchange. Finextra.
  7. ICE Announces Management Appointments and Board for ICE Futures Singapore and ICE Clear Singapore. ICE.
  8. Singapore Mercantile Exchange (SMX) Announced. Singapore Mercantile Exchange Pte Limited.
  9. New Exchange For a New Economic World Order, Global Financial Market Summit Announces The Singapore Mercantile Exchange. Now Public.
  10. New exchange for a new economic world order. Yahoo Video.
  11. Singapore Mercantile Exchange (SMX) Announced. PR Newswire.
  12. Merc's Melamed Resigns From Post At New Singapore Exchange. Chicago Tribune.
  13. Singapore And CBOT To Set Up Commodity Exchange. Risk News.
  14. SMX appoints Mr Thomas J. McMahon as CEO. Singapore Mercantile Exchange.
  15. SMX finalises preparations for January launch. Financial Times.
  16. TOCOM/SMX Sign MOU for Cooperative Agreement to Advance Derivatives Trading Landscape in Asia. Tokyo Commodity Exchange and Singapore Mercantile Exchange.
  17. SMX appoints RBS as settlement bank. Singapore Mercantile Exchange.
  18. Press Release. Singapore Mercantile Exchange.
  19. SMX to Launch Commodities Trade Aug. 31. {{{org}}}.
  20. SMX CEO identifies 34 futures contracts to launch. Dow Jones.
  21. Monetary Authority of Singapore grants final approval to Singapore Mercantile Exchange as Regulated and Licensed Commodity and Currency Derivatives Exchange from Singapore. SMX Press Release.
  22. SMX Sets Date To Trade. Wall Street Journal.
  23. SMX to launch spread contracts on copper. Commodities Now.