Singapore's SMX to launch new gold, silver futures

SINGAPORE Thu Apr 12, 2012 9:50am IST

Gold coins from Austria decorate a dress during a promotional event in Tokyo February 14, 2008. REUTERS/Kim Kyung-Hoon/Files

Gold coins from Austria decorate a dress during a promotional event in Tokyo February 14, 2008.

Credit: Reuters/Kim Kyung-Hoon/Files

Related Topics

Stocks

   

SINGAPORE (Reuters) - The Singapore Mercantile Exchange will roll out in May new gold and silver futures contracts and is also looking at rubber and sugar contracts, its chief executive said on Thursday, as the fledgling bourse moves further to boost liquidity.

SMX, owned by India's Financial Technologies, is hoping to capitalise on the brisk trading interest in gold and silver futures contracts traded in India, the world's biggest gold consumer, and give potential players the opportunity to hedge via the new contracts.

SMX Chief Executive Vaidyalingam Hariharan told Reuters the dollar-denominated E-Gold and E-Silver contracts, to be launched on May 8, will be cash-settled against the benchmark gold and silver futures contracts in India, run by its sister company, Multi Commodity Exchange.

"We are providing an alternate market because China and India are closed markets," Hariharan said in an interview.

"People generally import gold in U.S. dollars so it makes sense for them to hedge their risk in the same currency," he said.

The Shanghai Futures Exchange, China's biggest metals bourse, is looking at launching silver futures within the year, part of the city's ambitions to become an international financial centre by 2020.

Established in August 2010, SMX said trading volumes on all its contracts surged to more than 800,000 lots in the first quarter of the year, valued at nearly $30 billion, from around 37,000 lots in the same period in 2011.

Compared to established bourses, volumes on SMX remain modest. Volume traded at the London Metal Exchange, the world's top market for industrial metals, hit a record 146.6 million lots in 2011, valued at $15.4 trillion.

SMX currently offers 13 contracts, including gold and silver based on New York prices. Other futures contracts include iron ore, oil, copper, currencies and black pepper.

But the surge in SMX's trading volumes has been accompanied by thin open interest, prompting some industry players to cast doubt on whether investors in the bourse were using the contracts to hedge or if the interest is mostly from retail players.

But as with anything that is new, Hariharan said it takes time for a bourse to gain the confidence of the investing community.

"As far as a new exchange is concerned everyday is a milestone. But definitely the growth direction is there," he said.

Hariharan said SMX is also looking at launching rubber and sugar futures contracts within the year, with rubber possibly in May if the bourse secures the necessary regulatory approvals. That will add to the exchange's agricultural basket following the launch of its black pepper contract in February.

SMX is also broadening its trade membership base as it aims to boost liquidity in its contracts further.

Hariharan said he is hopeful the launch of more contracts will pay off.

"You can't keep on developing markets forever. You need to see some sort of traction in some good contracts which we need to really get," he said.

(Editing by Ed Davies)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage