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AFET Inks MOU with SMX

V Hariharan, CEO SMX

V Hariharan, CEO SMX

The Agricultural Futures Exchange of Thailand (AFET) recently completed the signing of a memorandum of understanding with the Singapore Mercantile Exchange (SMX), a pan-Asian commodity and currency derivatives exchange from Singapore. The signing of the agreement – witnessed by Mr. Boonsong Teriyapirom, Thailand’s Minister of Commerce – marks the beginning of a collaborative effort with the objective of enhancing both sides’ capabilities on the international stage through exchanges of knowledge and experience on various regulatory matters. AFET and SMX will together create or revise terms and conditions for futures contracts, strategic direction, regulatory system, and procedures for handling high-priority contracts. Additionally, the two exchanges will co-develop new technologies that reduce the complexity of trade procedures and share their expertise through training programs that focus on specific commodity types or the strengths of each market. In an address to the Commerce Minister, AFET President Mr. Chartri Sahavejjabhand said, “AFET’s goal is to become the regional hub in agricultural futures trading and a key part in the creation of a stable balance between commodity prices and reference prices of its six product types – white rice, jasmine rice, ribbed smoke rubber sheet no.3, block rubber, tapioca chip, and canned pineapples – all of which are among Thailand’s most important export products.”

“This memorandum of understanding marks the second agreement between AFET and a fellow Southeast Asian futures exchange – the first being the joint initiative with Bursa Malaysia Berhad in 2011. Together, AFET and SMX will be able to develop their knowledge and expertise together and jointly develop strategies and regulations that advance the capability of futures exchanges in this region.

Mr. V Hariharan, Chief Executive Officer of the Singapore Mercantile Exchange (SMX), added: “We are delighted to have signed this memorandum of understanding with AFET to develop the ASEAN Commodities Futures Market. We are committed to providing market participants in Thailand and the region, access to innovative Asia Centric products that cater to the needs of investors, entrepreneurs and other members of the ecosystem during Asian time zones.”

Commerce Minister Mr. Boonsong Teriyapirom, honorary chairman of the signing ceremony, also voiced his support for the agreement: “The Ministry of Commerce sees agricultural futures trading as a vital instrument in dealing with risks posed by pricing fluctuations.

Additionally, the presence of a futures exchange provides us with an indicator of future price trends and allows local businesses to anticipate upcoming changes, improve product pricing, reduce uncertainty over price changes, and open up new opportunities for investors.”

Today, AFET is the platform for the trading of 400 futures contracts per day on average. In 2012, the exchange saw 79,987 contracts – or 330 per day – change hands, representing a total value of 43,746 million baht with ribbed smoke rubber sheet no.3 (RSS3) sitting atop the exchange’s trading volume and pricing fluctuation (as high as 40%) charts.

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