World’s First, Singapore Exchange to clear OTC Indonesian Coal Swap
Singapore Exchange (SGX) will be the first exchange in the world to clear over-the-counter (OTC) Indonesian Sub-Bituminous Coal Swap from 3 November 2010. The extension of SGX’s OTC clearing service to the Asian coal market offers traders and physical players an effective risk management tool to support its high growth potential.
Mr Jeremy Ang, Executive Director, Commodities at Singapore Exchange said, “This new service is aimed at meeting the needs of price and counterparty risk management in the growing OTC coal swap market. Participants will gain access to an expanding and readily available pool of counterparties on SGX. This adds to the extensive list of OTC contracts SGX is already clearing.”
The contract will be cash-settled against the IHS McCloskey Indonesian Sub-Bituminous FOB
marker published by IHS Global Limited. The size of each contract is equivalent to 1,000 metric tonnes of physical sub-bituminous coal from Indonesia.
“We are delighted that SGX is clearing the contract which settles against the IHS McCloskey
Indonesian Sub-Bituminous FOB marker,” said Mr John Howland, Publisher, IHS McCloskey.
“This is a transaction based index that marks the price of coal within clearly established
parameters based on coal specification and vessel loading capacity, making it truly reflective of actual prices for this quality of coal. We are confident that clearing will help increase liquidity in this growing market.”
Indonesia is the world’s top exporter of thermal coal with an annual export volume of over 230 million metric tonnes, which accounts for 31% of world’s total export. More than 70% of this is exported to Asia to satisfy growing demand.