SGX and LME to launch three metal futures next year

The two exchanges will jointly launch metal contracts in aluminium, copper and zinc on SGX on 15 February 2011.

The collaboration will enable investors to trade metals in Asia through SGX’s wide distribution network of international and regional members. This brings together, a larger pool of Asian participants and allows them to ride the buoyant investor interest in Asia for metals trading.

In a statement, Magnus Bocker, Chief Executive Officer of Singapore Exchange said, “For the first time ever
SGX members and customers will be able to gain exposure to the price of base metals via SGX’s platform. I am confident that this joint initiative will bring greater vibrancy to the metals market in Singapore and benefit Asia.”

Martin Abbott, LME Chief Executive said, “Investors in Asia clearly value the integrity of LME prices but have told us they want new ways to trade LME metals. The appeal of LME-SGX Metal Futures lies in their small size, their simple monthly dates and settlement linked to the LME’s global benchmark prices.”

LME-SGX metal futures will replicate the specifications of the LME’s LMEmini contracts, which, at 5 tonnes per lot, are smaller than standard 25 tonne-per-lot LME futures and options contracts for aluminium, copper and zinc, and therefore more accessible to a wider range of investors. The LMEminis continue to be available for trading on LMEselect, the LME’s electronic trading platform.

LME-SGX metal futures will have 12 consecutive contract months listed for trading which will be cash settled at expiry based on the LME Official Cash Settlement Price for the relevant metal. LME prices are used by majority of the global metal industry as the benchmark for their physical trading.

The trading hours for the new contracts will cover the Asian trading day (T-session) from 8:00am to 3:20pm Singapore time and the European trading day (T+1 session) from 4:00pm to 2:00am the following day, Singapore time. The new contracts are traded and cleared exclusively on SGX.

To expand the suite of metal futures to meet investors demand, new contracts based on lead, steel,
tin and nickel will follow.