SGX launches options contract on global pricing benchmark for natural rubber

SGX SICOM TSR 20 is based on the TSR 20 (FOB) Futures contract.

Singapore Exchange (SGX) has launched an options contract on global benchmark grade, TSR 20 rubber, which adds to its suite of rubber derivatives, an announcement revealed.

The SGX SICOM TSR 20 Rubber Options contract is based on the SGX SICOM TSR 20 (FOB) Futures contract.The options contract expires into futures positions and offers users the choice of physical delivery to settle their positions.

“This launch follows strong demand from market participants and is timely given the increased liquidity of the underlying futures,” said William Chin, head of commodities at SGX.

Buyers of options is assured to have limited downside risk capped at the options premium, whilst seeing upside potential. Writers of options can earn income via premiums collected.

It adds to SGX’s rubber derivatives suite, comprising SGX SICOM TSR 20 Futures, SGX SICOM RSS 3 Futures and SGX SICOM Over-The-Counter (OTC) TSR 20 Rubber Forwards.

In 2018, SGX cleared more than 9 million metric tonnes of rubber derivatives, a 23% YoY growth. In January-April 2019, volume was almost 3.5 million tonnes, up 21% over the same period last year.