World’s first Iron Ore Futures Contract on a global platform goes live on SMX
Metal Bulletin Iron Ore (MBIO) Index based futures contract to position Singapore as global trading hub for iron ore:
- Smaller contract size and optimal tick size to attract directional traders
- Ideal hedging tool using a respected & independent Index barometer published daily by Metal Bulletin
- MBIO Index futures contract to become an industry benchmark.
Singapore, 10 August 2011 – Singapore Mercantile Exchange (“SMX”), the first pan-Asian multi-product commodity and currency derivatives exchange, today announced that the world’s first Iron Ore Futures Contract on a global platform, settled based on the Metal Bulletin Iron Ore (MBIO) Index will be launched on the 12th August 2011. Metal Bulletin is the leading independent provider of premium information and pricing for the metals industries. Metal Bulletin’s MBIO index is a good reflection of the seaborne merchant market for sinter fines delivered to China.
The futures contract will complement Singapore as a major trading centre of iron ore and will be an ideal hedging tool for smaller exporters, traders and importers. The physical market for iron ore is valued at about $ 200 billion a year, making it second only to the market for crude oil. China alone accounts for more than $ 100 billion of this market, with production at 250 million tonnes (based on equivalent grade 62% Fe) and imports of 619 million tonnes.
The Metal Bulletin Iron Ore (MBIO) Index utilises daily price data of actual transactions on a CFR China spot basis received by Metal Bulletin from a broad spectrum of industry participants, including leading independent Chinese steel consultancy and data provider Shanghai Steelhome’s, which has widespread contact base of steel producers and iron ore traders across China. The MBIO Index is a tonnage-weighted calculation of actual physical transactions, normalised to 62% Fe, CFR Qingdao and is published daily at mid-day London time.
The Metal Bulletin Iron Ore (MBIO) Index utilises daily price data of actual transactions on a CFR China spot basis received by Metal Bulletin from a broad spectrum of industry participants, including leading independent Chinese steel consultancy and data provider Shanghai Steelhome’s, which has widespread contact base of steel producers and iron ore traders across China. The MBIO Index is a tonnage-weighted calculation of actual physical transactions, normalised to 62% Fe, CFR Qingdao and is published daily at mid-day London time.
Mr. V Hariharan, Interim Chief Executive Officer of SMX, said: “Based on the unique contract design of smaller trading unit, optimal tick size and monthly single day expiry, the physical players of all sizes across the supply and value chain of iron ore can participate in the SMX MBIO Index futures contract for effectively covering their price and counterparty risk.”
Mr. Raju Daswani, Managing Director of Metal Bulletin, said: “Metal Bulletin has no financial interest in the level or the direction of the MBIO Index, which is an open and transparent representation of the iron ore market. We are pleased to play a crucial role in offering the MBIO Index futures contract on SMX and would expect it to become the industry benchmark over a period of time.”
SMX which went live on August 31, 2010 has seen its membership number double over the past 11 months crossing 50. The exchange had started with 25 members and four contracts and today has more than 50 members including 7 clearing members and 11 contracts. Among the leading clearing members signed-up thus far include Newedge, Ong First, Morgan Stanley, UOB, ICICI Bank, Citi and Phillip Futures. The prominent trade members include Glencore, Total Global Steel, Trafigura, Vitol and TransMarket.
SMX trading sessions span Asian, European and US business hours, with central counterparty clearing performed by SMXCC. The SMX platform allows remote participation through its diverse network of members and ISVs. The Exchange also offers its own proprietary front-end solution for direct market access.
About Singapore Mercantile Exchange Singapore Mercantile Exchange is a pan-Asian multi-product commodity and currency derivatives exchange situated in Singapore. It offers a comprehensive platform for trading a diversified basket of commodities including futures and options contracts on precious metals, base metals, agriculture commodities, energy, currencies and indices.
SMX offers market participants the benefits of market transparency, time zone convenience, price discovery and benchmarking, price risk management and multiple connectivity options. Counterparty clearing and settlement risk is effectively managed through its clearing house, the Singapore Mercantile Exchange Clearing Corporation.
The regulator of Singapore’s financial markets – the Monetary Authority of Singapore (MAS) – has granted SMX ‘Approved Exchange’ status since 2010.
SMX is backed by the world’s leading creator of exchanges - Financial Technologies (India) Limited - which has successfully established 10 exchanges across India, Dubai, Singapore, Africa, Mauritius and Bahrain.
SMX is a member of leading 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).
About Singapore Mercantile Exchange Singapore Mercantile Exchange is a pan-Asian multi-product commodity and currency derivatives exchange situated in Singapore. It offers a comprehensive platform for trading a diversified basket of commodities including futures and options contracts on precious metals, base metals, agriculture commodities, energy, currencies and indices.
SMX offers market participants the benefits of market transparency, time zone convenience, price discovery and benchmarking, price risk management and multiple connectivity options. Counterparty clearing and settlement risk is effectively managed through its clearing house, the Singapore Mercantile Exchange Clearing Corporation.
The regulator of Singapore’s financial markets – the Monetary Authority of Singapore (MAS) – has granted SMX ‘Approved Exchange’ status since 2010.
SMX is backed by the world’s leading creator of exchanges - Financial Technologies (India) Limited - which has successfully established 10 exchanges across India, Dubai, Singapore, Africa, Mauritius and Bahrain.
SMX is a member of leading 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).
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