Singapore Mercantile Exchange (SMX) is here...and then?

Singapore Mercantile Exchange - Where the world trades


Learn more about the Singapore Mercantile Exchange or in short, SMX here. Quoted: "The Singapore Mercantile Exchange (SMX) is the first pan-Asian multi-product commodity and currency derivatives exchange. Situated in Singapore, SMX 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 commodity indices."

A lot of words, huh? Still needs to learn more on how the trades are held.

The Singapore Mercantile Exchange (SMX) kicked off trading on Tuesday with a somewhat muted response from investors.

Observers said this could partly be due to a lack of awareness and that some are taking the wait-and-see approach.

However, the first pan-Asian commodity and currency derivatives exchange said it is still pleased with the first day of trade and expects volumes to grow with strong demand in months ahead.

It plans to roll out two new currency pairs on top of the four products that started trading on Tuesday.

Gold, the first product among others to be traded, proved the most popular. The exchange said it expects its gold contract to be a popular hedging tool among Asian traders.

And demand for such products is only set to grow.

Thomas McMahon, CEO, Singapore Mercantile Exchange, said: "How we get market participation - it's already here, the industry demand for hedging, risk mitigation or even commodities as an asset class, it already exists.

"It just doesn't exist on an Asian exchange, it's fragmented in its nature out here. It has legacy, which is good inherently. There's good trading volumes from Asia and they've only grown over the last 5 years dramatically."

Last year, the region saw 6.2 billion commodities contracts traded, versus 6.3 billion in both the US and Europe.

SMX said the demand is strong enough to grow its own volume, rather than compete for trade from other exchanges.

Analysts are optimistic about the options that SMX has to offer.

Avtar Sandu, manager, Asian Commodities, Phillip Futures, said: "Firstly, it's going to be an Asian contract, so you can have benchmarking during Asian time rather than you wait for London to open or New York to open before you can seal the deal.

"So if you have a benchmarking in Asia itself, at 5 o'clock, you can have a benchmark to price in your goods."

Observers added that this will offer more liquidity to investors in the Asian time zone.

The SMX said it hopes to sign 68 clearing, trading and broking members by the end of the year.

From Channel NewsAsia, "SMX goes live with 4 contracts; more to follow".

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