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APEX conducts industry peer reviews, plans release of LSFO futures contract

11 Sep 2019

Singapore-based derivatives exchange Asia Pacific Exchange (APEX) is preparing for the release of a physically delivered low sulphur fuel oil (LSFO) futures contract in the fourth quarter (Q4) of 2019, learns Manifold Times.

It has started several rounds of industry peer reviews in the week ended 8 September to discuss drafts and targets to officially launch the new futures contract in either October or November subject to the completion of the necessary regulatory processes, said a spokesman.

It is intended for the new LSFO futures contract to be free from N-Butanol, Cyclohexanol, Dibutyl Ether, Styrene, Phenol, Dicyclopentadiene, 4-Cumylphenol, Accelerated Oxidation Precipitate, he said at a recent briefing, while noting the new contract will be stricter in terms of quality than other similar versions offered by exchanges.

In accordance with the proposed contract design, the deliverable underlying product shall be free from any material at a concentration that causes the product to be unacceptable for use in accordance with ISO 8217:2017 (E), or any material at a concentration that is harmful to personnel, jeopardises the safety of the ship, or adversely affects the performance of the machinery.The deliverable quantity for the contract is expected to be in integral multiples of 500 metric tonnes (mt); and APEX is proposing a design to allow it to approve the delivery when the quantity is not within integral multiples of 500 mt subjected to agreement by both buyer and seller.

Physical delivery methods will be via vessels, Singapore-registered bunker barges, or inter tank transfers from APEX recognised warehouses.

There is also a consideration to set the new futures contract’s tolerance level as 0.5% or 10 metric tonnes (mt), whichever is bigger, for deliveries via vessels or Singapore-registered bunker barges in order to be fairer to the buyer and seller.

“Additionally, it is intended for the buyer to propose two surveyors from the panel of APEX approved surveyors and the cost of surveyors will be borne 50/50 by both buyer and seller,” notes the spokesman.

“A quality report will be provided to the buyer before delivery, with samples taken from the bunker manifold.

“In the event of any disputes on quality, tests can be conducted on the retained manifold dripping samples. All samples taken during the delivery, will be used for dispute purposes.”

APEX is the third exchange approved by the Monetary Authority of Singapore with the “Approved Exchange” and “Approved Clearing House” license.

To date, APEX has four listed contracts, comprising of Energy, Agricultural and Financial products. In addition to EFP, the delivery methods of APEX contracts include the APEX Warehouse Receipt Delivery, FOB Delivery and cash settlement.

Photo: Manifold Times
Published: 11 September, 2019

 

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