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Tue 8 Sep 2009, 07:46 GMT

SGX invites comments on 380-cst contract


Singapore Exchange seeks feedback on launch of bunker fuel futures contract.

Singapore Exchange Limited (SGX) is inviting public comments on the proposed contract specifications of the Fuel Oil 380-centistoke futures contract (FO 380 Contract) to be launched on its derivatives market.

The proposed FO 380 Contract will be traded in units of 100 Tonnes per lot and is physically deliverable at Exchange-designated installations. At present, all these installations are located in Singapore.

The proposal includes consequential amendments to SGX Futures Trading Rules and Clearing Rules.

The key features of the contract that relate to physical delivery are:

1. Delivery Facilitated by the Clearing House

The Clearing House will match buyers and sellers after taking into account the quantity, installations for delivery, delivery dates and methods of delivery to the extent reasonably possible. The minimum size for delivery will be 2,000 Tonnes.

2. Performance Deposit and Security

To ensure that buyers and sellers fulfil their delivery obligations, buyers and sellers will post a Performance Deposit (PD) with the Clearing House. Upon delivery by the seller, the Clearing House will require a security from the seller for application in the event of any disputes arising from the fuel oil delivered.

3. Performance Guarantee

The buyer’s and seller’s respective Clearing Members will guarantee the performance of payment and delivery obligations in accordance with the SGX Clearing Rules and Specifications.

4. Use of Letters of Credit

Letters of credit may be used for the posting of PD and payment.

The consultation paper, which explains the rationale and proposed amendments in detail, will be available on SGX website at www.sgx.com. Market participants and members of the public can forward their feedback and suggestions on the above proposed amendments from today until 17 September 2009 via email and either by post/courier or fax.

Email: rules@sgx.com
Fax: +65 6534 2207/ +65 6534 0092

Post/Courier:
Singapore Exchange Limited
2 Shenton Way,
#19-00 SGX Centre 1,
Singapore 068804.
Attn: Lee Sue-Lynn
Regulatory Policy
Risk Management and Regulation

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