SGX launch of LSFO derivative contracts to increase bunker market liquidity
The launch of the Singapore Exchange (SGX) Low Sulphur Fuel Oil (LSFO) derivative contracts on 18 November 2019 will provide increased market liquidity for players within the marine fuels industry, believes the Head of Asian Business Development at global energy and commodity price reporting agency Argus Media.
Alan Bannister notes the new SGX Argus LSFO 0.5%S Singapore Bunker Index Future contracts will be based on a bunker index calculated by Argus Media; it will be traded in lots of 100 metric tonnes (mt).
“This is the same contract already listed on APEX and now trading about 1,000 lots per day,” he told Manifold Times.
The APEX Argus Bunker Index (ABI) Singapore LSFO 0.5%S Futures Contract, a product traded as LFA (Low Sulphur Fuel Oil Argus) on the APEX platform, is transacted through lots of 10 mt each.
“Hopefully these two contracts together will increase overall liquidity as the APEX screen provides good visibility of market prices and the SGX contract will suit commercial traders who prefer to execute bigger sizes via brokers,” says Bannister.
“Both these contracts financially settle on the monthly average of Argus Bunker Index Singapore LSFO spot market assessments, which are bases on delivered to ship bunker deals submitted to Argus by 7pm each day.”
The new environmental regulations starting in 2020 will have a significant impact on the global fuel oil and bunker market, according to SGX.
In the volatile environment which is likely to ensue, the new SGX Low Sulphur Fuel Oil contracts will allow market participants to risk manage their cargo and bunker exposure.
Related: SGX to launch low sulphur fuel oil derivative contracts on 18 November 2019
Related: Argus ‘pleased’ on successful debut of APEX ABI Singapore LSFO Futures
Related: APEX enters agreement to use Argus’ prices in proposed LSFO futures contract
Related: Argus ABI Singapore LSFO futures contract starts trading on APEX
Related: APEX ABI Singapore LSFO Futures now ready to start trading ops
Related: APEX ABI LSFO Futures completes Singapore regulatory process
Photo credit: Argus Media
Published: 12 November, 2019
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