First OTC Container Swaps Trade Cleared in Asia
Singapore Exchange (SGX) has cleared its first Container Swap trade on 2 August 2010 following the launch of its clearing service for four new over-the-counter (OTC) Container Swap contracts.
The first Container Swap trade cleared was between Morgan Stanley and Credit Suisse, brokered by Clarkson Securities.
Mr Joe Radmore Vice President at Morgan Stanley which operates a fleet of vessels, said, “Having the SGX contracts is a positive development, especially as it brings more Asian players to the table. This is yet another step on the road to realising a fully functioning liquid container derivatives market.”
Four major container freight routes are offered as a start: Shanghai-Europe, Shanghai-Mediterranean, Shanghai-US West Coast and Shanghai-US East Coast. Final settlement of the SGX Container Swap contracts will be against the Shanghai Containerized Freight Index (SCFI) published by the Shanghai Shipping Exchange.
Mr Kenneth Ng, Vice President, Commodities at SGX said, “The contracts will support the nascent container freight derivatives market by managing counterparty credit risk. Participants will gain access to SGX AsiaClear’s large pool of counterparties without the need to set up individual credit agreements with each counterparty.”
Mr Zhang Ye, President of the Shanghai Shipping Exchange, said, “We are pleased to partner SGX AsiaClear to provide risk management tools to help companies manage their container freight rates. We look forward to working with the SGX in future initiatives to develop the container freight derivatives market.”
The contracts offer the regional and global container shipping community an important tool to manage their freight and credit risk.