SINGAPORE, November 21, 2014 /PRNewswire/ --
Singapore Exchange (SGX), Asia's most international exchange, is partnering with ICIS, the world's largest petrochemical intelligence provider, to offer four new Asian polyolefins swaps and futures contracts:
- SGX ICIS LLDPE CFR China Swaps and Futures
- SGX ICIS LLDPE CFR SE Asia Swaps and Futures
- SGX ICIS PP Flat Yarn (Raffia) CFR China Swaps and Futures
- SGX ICIS PP Flat Yarn (Raffia) CFR SE Asia Swaps and Futures
The collaboration was prompted by increased demand for price risk management tools in the Asian polyoefins market. An exchange-cleared swaps contract provides market players with protection against default risks by eliminating the counter-party credit risk that is inherent in bilateral trades.
Reliable risk management instruments to inform hedging strategies in the Asian polyolefins markets are becoming essential. The polyolefins swaps and futures contracts provide a more direct hedge over existing hedging instruments that are solely based on feedstocks.
The SGX-ICIS Asian polyolefins swaps and futures contracts will be settled based on the ICIS Monthly Settlement Prices (MSPs). The ICIS MSPs are the monthly averages of the weekly spot price assessments published by ICIS. ICIS's polyolefins spot price assessments are widely used by resin producers, plastics processors and resins traders in Asia as a benchmark for contract pricing.
The partnership of the two well-established companies in their own fields for the Asian Polyolefins Swaps and Futures Contracts will serve to assure investors and traders of the product integrity.
"SGX is pleased to collaborate with ICIS to bring derivatives clearing to the petrochemical industry in Asia. The proposed contract is designed to address the industry's need for an efficient risk management solution to manage the counterparty and price risks in this volatile market environment. We will continue to provide our customers with a trusted and flexible platform to manage the complexity of Asia's evolving market structure, " said Lily Chia, Head of Product Management for Commodities at SGX.
"The launch of these contracts by the SGX heralds a new beginning for polyolefins trade in Asia by enhancing efficiencies in financial risk management. ICIS has been providing industry-recognised polyolefins benchmarks in Asia for close to 25 years and we are indeed honoured to have been selected by the SGX as a partner. We are also pleased to add that ICIS's Asia polyolefins benchmarks have passed an independent audit, the first to do so, based on IOSCO's Price Reporting Agency (PRA) Principles, which is a further sign of our commitment to our stakeholders," Steve Tan, Asia Editorial Director at ICIS, further commented.
The SGX-ICIS Asian Polyolefins Swap and Futures Contracts will be launched on 19 January 2015. Key contract specifications are given below:
SGX ICIS PP SGX ICIS PP SGX ICIS LLDPE SGX ICIS LLDPE Flat Yarn Flat Yarn CFR China CFR SE Asia (Raffia) CFR (Raffia) CFR SE Contract Swaps and Swaps and China Swaps Asia Swaps and Specifications Futures Futures and Futures Futures Contract Size (1 lot) Swaps: 50 metric tons Futures: 10 metric tons Swaps: PEC Swaps: PES Swaps: PPC Swaps: PPS Ticker Symbol Futures: PECF Futures: PESF Futures: PPCF Futures: PPSF Minimum Price Fluctuation US$0.01 per metric tonne Contract Period 12 consecutive months NLT Minimum Volume Threshold Swaps: N.A. Futures: 5 lots Swaps: Futures: T session: 8.00am - 8:00pm T session: 8.00am - 8:00pm T+1 session: 8:00pm - 4.00am T+1 session: 9:00pm - 2.00am Trading Hours Last Trading Day: 8.00am - Last Trading Day: 8.00am - (Singapore Time) 8.00pm 8.00pm Last publication day of the relevant index in the Last Trading Day contract month Cash settlement using the arithmetic average of all ICIS spot price assessments in the expiring month for the Final Settlement relevant underlying product, rounded to two decimal Price places.
ICIS is the world's largest petrochemical market information provider and has fast-growing energy and fertilizer divisions. Our aim is to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high-value news, analysis and independent consulting, enabling our customers to make better-informed trading and planning decisions. We have more than 30 years' experience in providing pricing information, news, analysis and consulting to buyers, sellers and analysts.
With a global staff of more than 800 employees, ICIS has offices based in Houston, Washington, New York, London, Montpellier, Dusseldorf, Karlsruhe, Milan, Mumbai, Singapore, Guangzhou, Beijing, Shanghai, Yantai, Tokyo and Perth. Some 350 of ICIS's staff are journalists engaged in reporting market prices and news, and ICIS is fully committed to upholding the highest journalistic principles of verification, corroboration and authentication. ICIS has a compliance framework that along with its methodologies and business processes, adheres to the requirements of the IOSCO PRA Principles.
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