Cbot and SGX to partner on commodities

The Singapore Exchange (SGX) and Chicago Board of Trade (Cbot) plan to launch a joint commodities derivatives exchange by the end of the third quarter of 2006, while SGX is also developing a central clearing facility for energy derivatives and forward freight agreements.

Thirteen general clearing members have confirmed their participation to provide clearing for over-the-counter trades, which will start by March 2006.

SGX and Cbot have established a 50-50 joint-venture company in Singapore to set up a commodities derivatives exchange, called the Joint Asian Derivatives Exchange (Jade), said SGX in a statement in late December. The joint venture will develop commodity contracts for listing on Jade. The new products will be hosted on the Cbot's electronic trading platform and all trades will be cleared by SGX's derivatives clearing house.

SGX chief executive Hsieh Fu Hua says: "The joint venture is key to SGX's strategic focus to be an Asian gateway. It represents a further step in Singapore's development as a leading derivatives trading and risk management centre in Asia. "

SGX had previously been in talks with the New York Mercantile Exchange, the world's biggest energy futures exchange, over a potential link-up, but companies ended discussions in April 2005. One reason for this was SGX's decision to close floor-trading operations and go fully electronic.

The exchange posted its best quarter since listing in November in the three months to September 30 (reported in mid-January), with $45.3 million net profit, on strong revenue growth and continued cost management.