The Singapore Mercantile Exchange plans to roll out additional currency futures and may add an oil-products contract after the bourse starts trading today with four contracts covering commodities and foreign exchange.

“The next contracts we’re looking to add will be currencies,” said Thomas McMahon, the chief executive of the exchange in an interview at the SMX office yesterday. “We’re looking at Aussie-U.S. dollar and Japanese Yen-U.S. dollar in terms of currency pairs that will be complementary to the euro.”

 

The SMX is introducing a euro-dollar future and it will also offer a Brent oil contract denominated in euros and financially settled West Texas Intermediate crude futures. The fourth will be a gold contract with physical delivery to vaults in Singapore.

 

The exchange aims to become a place for traders to hedge purchases in Asia’s largest energy-trading center. The city- state is home to 1.3 million barrels a day of refining capacity, including plants owned by Singapore Refining Co. and Exxon Mobil Corp. on Jurong Island and Royal Dutch Shell Plc at Pulau Bukom.

 

The Exchange will target new oil-product contracts for diesel and gasoline in the region rather than for fuel oil that powers ships, or bunker fuel., McMahon said.

 

“One of the things for Singapore is there is a lot more here than bunker,” he said. “People have tried before in different iterations. It’s the third-densest refining region in the world. They make a lot more than bunker fuel here.”

The demand for gold from the emerging economies of China and India is prompting the creation of a gold contract, said Jignesh Shah, the SMX’s vice chairman during the interview. The futures will be physically deliverable in sizes of 1 kilogram bars, or about 32 troy ounces, to vaults operated by JPMorgan Chase & Co.

 

“There is a big appeal for a foreign delivery center to emerge from Asia for gold,” Shah said yesterday. “There are two criteria that are important. That it be an international finance center and global players should have free entry and exit. While India and China consume a large amount of gold they are not open economies.”

 

Shah is also the managing director of the SMX’s backer Financial Technologies (India), which operates the largest commodity bourse in India.

 

The SMX’s Brent-Euro crude contract for November settlement was at 61 euros a barrel with one future traded at 12:15 p.m. Singapore time. West Texas Intermediate oil for October settlement was at US$73.96 (100.3) with four deals carried out.

 

Gold for delivery to Singapore in December, the only contract traded so far, was at U$1,236.20 an ounce with 44 lots transacted.

 

U.S. dollar-euro futures for December were at US$1.2648 with 23 contracts traded.

 

The Exchange plans to focus on developing better contracts and making sure trading systems are in plus before concerning itself with how much volume is traded, Shah said in a press conference today after the launch.

 

“What is important is system research and risk management,” he said. “As an exchange company we’ll be focusing on that rather than chasing turnover or targeting any turnover.”