SMX Gold Futures Will Become First Trading Product
Singapore’s first gold futures contract with physical delivery at vaults in Singapore
Leading Pan-Asian multi-product commodity derivatives exchange Singapore Mercantile Exchange (“SMX” or “the Exchange”) announced May 21 that it will launch Singapore’s first Gold futures contract that will be physically settled. This will be the first product to be launched when SMX moves into pilot testing, and subsequently when it goes live.
The gold contract will be delivered at high security vault facilities in Singapore, including the new state-of-the-art vault facility which will be operated by JP Morgan in Singapore’s first round-the-clock free trade zone.
Thomas J. McMahon, Chief Executive Officer of SMX said, “The launch of the gold futures contract is an important milestone for both SMX and Singapore as it will be physically delivered in the island republic. Singapore is the major crossroad for gold producing regions of South Africa, Australia and South America. Within the backdrop of a global flight to investment safety and the trend of a migration of Asian capital and investment back to Asia, the ability to price, make or take delivery of physical gold in Singapore is a compelling proposition.”
Eric Maine, Head of Product and Research at SMX said, “Gold has always been a traditional and significant investment of choice throughout Asia. The SMX Gold Futures Contract provides a convenient investment and hedging vehicle, within the safety of the Singapore regulated exchange traded environment, for the pricing and delivery of gold.”
The futures contract will be traded every working day from 0900 to 2200 hours Singapore time, in units of 32 ounces per unit, for the months of February, April, June, August, October, and December.
The Last Trading Day for every contract will be the fifth to the last Singapore business day of the delivery month. Settlement will be done via physical deliveries at vaults in the financial and commercial hub of Singapore, where the Exchange is located. The delivery unit is a 1-kilo bar of minimum 995 fineness. Refiners and vaults are subject to SMX standards and approvals. Delivery Day has been set at two working days after Notice Day, which itself is the first business day after the Last Trading Day.
SMX announced earlier this month that the exchange will go live in August 2010 on its state-of-the-art electronic trading platform. In the preceding months of June and July, SMX will be conducting conformance testing with the ISVs and industry wide testing with member firms prior to commencing trading operations in August.
As Singapore’s first licensed commodity derivatives exchange, SMX will offer a comprehensive product range that will include precious metals, base metals, energy, agriculture commodities, commodity indices, currencies and other financial instruments. SMX aims to synchronise derivatives and physical trading within the Asian time zone, and offer new derivatives products for effective risk management