Critical mass reached in iron ore swaps market as traders boost liquidity
Falling iron ore prices are ramping up market liquidity to the extent that hedge funds are entering the market as a China proxy
Traders have been the driving force behind the record iron ore swaps volumes seen since the end of the second quarter, as market participants believe liquidity levels are now sufficient to entice more end-users, producers and hedge funds to participate in the derivatives market.
The Singapore Exchange (SGX), the dominant global platform for clearing iron ore swaps contracts, has posted record monthly volumes in three of the four months since May. Trades cleared in August reached 29,763 contracts
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