Singapore Fostering Commodity Trade as Clearing Units Expand

(Bloomberg) — Singapore’s financial regulator will work with commodity exchanges, investors and producers to support the development of the city-state as a trading center, including the expansion of clearing houses in Asia. The entry of new clearing houses can boost liquidity and encourage the development of products, the Monetary Authority of Singapore said in an e-mailed response to queries. Clearing houses help improve risk management in derivatives markets during Asian hours, the MAS said. Singapore, about one-quarter the size of Rhode Island, sits close to the equator on the sea lanes between China, Japan and India, Asia’s three largest economies. Neighbor Indonesia is the world’s largest exporter of palm oil and tin, while Thailand is among the top three shippers of rice, rubber and sugar. Clearing houses operate as central intermediaries between counterparties, reducing risks of default for users and investors. “Clearing of commodities is definitely a possibility and it’s an area where no other market in the region except Australia can actually have an advantage,” Stephane Loiseau, head of cash equities and global execution in Asia-Pacific at Societe Generale SA, said in an interview in Hong Kong. “That is more likely to be successful than the push in listed … continue reading

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