SMX Announces World’s First International Black Pepper Futures Contract
Singapore Mercantile Exchange (“SMX”), the first pan-Asian multi-product commodity and currency derivatives exchange, announced September 28 that it will launch the world’s first international Black Pepper Futures Contract (Contract Symbol: SMPEPPER) on its cutting–edge electronic trading platform with physical delivery-based settlement, as its first agricultural commodity derivatives product.
SMX has obtained approval from the Monetary Authority of Singapore (MAS) to list SMPEPPER on its trading platform. SMX is at present working with relevant industry partners to create awareness about the new Contract, while collecting their feedback to streamline the physical settlement procedure.
Mr. Thomas J. McMahon, Chief Executive Officer of SMX, commented: “Exhaustive research and close consultation with key industry players is one of our primary objectives. This latest contract constitutes noteworthy fruition of such efforts.”
“We are listing the most commonly traded grade of Black Pepper, from discussions and partnerships with key exporters and importers both on a regional and global basis. Trading hours will span all major markets, providing exciting opportunities for price discovery leading to global benchmarking. Managing price volatilities is a very crucial factor in agricultural products such as Black Pepper, where markets are unpredictable. The marketplace seems excited by this latest development, and on our part agriculture commodity derivatives is a key segment for expansion,” Mr. McMahon added.
Mr. Vijaykumar Iyengar, Managing Director of Agrocorp International Pte Ltd, said: “Over the last two decades we have witnessed Vietnam overtake India as the world’s largest producer and exporter of Black Pepper. Overall the key producers are still in Asia, while the larger consuming nations are in the West. Such listings by SMX essentially bring all market players to the same table, ensuring efficient price discovery.”
Mr. Do Ha Nam, Chairman of the Vietnam Pepper Association, said: “Having a Black Pepper futures contract would give rise to natural price discovery which would benefit the entire value chain participants of Black Pepper.”
Other key exporting nations of Black Pepper include Malaysia, Indonesia, Sri Lanka and Brazil. The U.S. is the largest importer of Black Pepper. Other large importing nations include Germany, Netherlands and Singapore.
SMX obtained Approved Exchange status from the Monetary Authority of Singapore (MAS) in 2010 and went live for trading on 31 August 2010 with four products: Brent Crude Oil Futures (denominated in Euro), WTI Crude Oil Futures, Euro-US Dollar Currency Futures, and the first Gold Futures Contract with physical delivery-based settlement in Singapore.
Multi-currency and multi-asset trading, clearing and settlement are available via the SMX platform, which offers multiple connectivity choices for global participation in addition to guaranteed settlement and delivery for a wide range of tradable assets.