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Singapore Exchange launches new derivatives contracts

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LNG Industry,

Singapore Exchange (SGX) has released a statement claiming that it has launched its new SGX FOB Singapore SLlnG LNG derivatives contracts. Overall, 10 000 million Btu of SGX FOB SLlnG LNG Swaps were transacted in the March 2016 contract month between Pavilion Gas Pte Ltd and Trafigura Pte Ltd. They were cleared on SGX through two SGX clearing members – SG Securities (Singapore) Pte Ltd and DBS Vickers Securities Ltd.

The contracts address changing developments in the LNG market, in which risk management and price formation dynamics are increasing in importance. This has occurred due to new LNG supply capacity, as well as decreased demand from the traditional buyers, and rising short-term spot prices and unpredictable trade flows.

FOB Singapore SGX LNG Index Group (SLlnG), which is a spot pricing index for Asian LNG, assesses prices in several key locations. The index is based on 20 major participants, consisting of buyers, sellers and traders.

The CEO Asia Pacific, Trafigura, Tan Chin Hwee, said: “We welcome the launch of the SGX SLInG LNG Derivatives and are excited to be a part of this very important step in the evolution of the LNG market. We believe increased participation in this market will contribute to improving transparency and liquidity and reducing risk for the Asian LNG market and ultimately enhancing customer security of supply.”

Edited from press release by David Rowlands

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