SGX adopts Fastmarkets MB's 65% Fe iron ore index for new derivatives contract
October 11, 2018 --
LONDON, Oct. 11, 2018 /PRNewswire/ -- The Singapore Exchange (SGX) will launch a high-grade iron ore derivative product to be settled against the daily 65% Fe iron ore index published by Fastmarkets MB, in December, subject to regulatory approvals, the exchange said on Thursday October 11.
"A high-grade contract is an important addition to our iron ore suite, backed by strong market interest reflecting a structural shift in China's environmental policy," William Chin, the exchange's head of commodities, said.
"We are delighted with the strong partnership with Fastmarkets in driving price transparency in a 65% Fe contract that will add new liquidity to the bellwether 62% Fe contract, allowing market participants to hedge and trade the grade differentials," he added.
Fastmarkets price development director Christopher Ellis said that the price reporting agency was pleased to partner with the SGX to bring to the market a new high-grade derivative settled against its 65% Fe index.
"The increased volatility in inter-grade spreads has led to broad market support for a high-grade iron ore derivative and makes it the next logical step in the evolution of the iron ore market," he said.
The decision to launch the cash-settled contract follows calls from the industry for a suitable price risk-management tool related to their exposure to the high-grade iron ore segment.
The basis of settlement for the SGX's new product - the MB 65% Fe Iron Ore Index, published daily by Fastmarkets - is used widely in physical contracts.
"The launch of a high-grade derivative will usher in the next phase of evolution for iron ore," Jamie Pearce, the executive director of SSY Futures, told Fastmarkets last month.
Fastmarkets MB's daily 65% Fe iron ore index is based on a tonnage-weighted calculation, with actual transactions carrying the full weight as reflected by the reported volume.
Fastmarkets is the leading price reporting, analytics & events organization for the global metals, industrial minerals and forest products markets. It operates within Euromoney Institutional Investor PLC. Fastmarkets' core activity in pricing drives transactions in commodities markets around the world and is complemented by news, industry data, analysis, conferences and insight services. Fastmarkets includes brands such as Fastmarkets MB and Fastmarkets AMM (previously known as Metal Bulletin and American Metal Market, respectively) RISI and FOEX Its main offices are in London, New York, Boston, Brussels, Helsinki, São Paulo, Shanghai, Beijing and Singapore. Euromoney Institutional Investor PLC is listed on the London Stock Exchange and is a member of the FTSE 250 share index. It is a leading international business-to-business information group focused primarily on the global banking, asset management and commodities sectors.
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