SGX teaming up with Chinese commodities exchange to develop commodities market

The Singapore Exchange (SGX) will work with a commodity exchange in China to develop the commodities markets in both countries.

The two exchanges signed a memorandum of understanding (MOU) for the partnership on March 7, SGX said in a statement on Monday.

The bourse said it and the Dalian Commodity Exchange would jointly explore areas such as the development of new commodity derivatives and investor education in each other's markets.

Chief executive Magnus Bocker said that the collaboration was an effort to enhance the commodity offerings and infrastructure in Asia, particularly in the iron and steel industry.

"By synchronising our strengths, international customers can tap on the unique advantages and opportunities in China and the surrounding growth economies."

Mr Liu Xinqiang, chairman of the Dalian Commodity Exchange, said that on one hand, China was one of the world's major commoditities producers and consumers.

"In recent years, the derivatives market was steady and saw rapid developments," he added.

On the other hand, Singapore was an important trading centre for stocks and derivatives in the Asia Pacific region and the world. "Its open and free financial market and environment has attracted international investors," he said.

"Both our markets complement each other ... This partnership is an opportunity for us to contribute to the development and prosperity of Asia and the global derivatives market and better serve the real economy."

SGX also inked an MOU with the Shanghai Futures Exchange in October last year, also to develop a commodity derivatives market in China and Singapore.

Under that agreement, the two exchanges will collaborate in the development of derivatives for energy, metals, chemicals and commodity indexes.

SGX earlier set up a commodities exchange called the Joint Asian Derivatives Exchange in 2006 as a 50:50 joint venture with the Chicago Board of Trade.

However, the partnership later dissolved due to the absorption of the Chicago Board of Trade into the Chicago-based futures exchange CME Group.