Singapore Exchange (SGX) and New Zealand’s Exchange (NZX) have signed a heads of agreement on Oct 13 to explore a global partnership to grow NZX’s dairy derivatives market together.
The non-binding agreement will explore the listing of NZX’s dairy derivatives contracts on SGX’s trading and clearing platforms.
The partnership will leverage on NZX’s dairy product development expertise and client relationships as well as SGX’s global market connectivity, strong Asian presence and international distribution.
“Market participants could expect augmented access via current and new trading and clearing channels,” says SGX in a filing on Oct 13.
The dairy derivatives market was launched on the NZX in 2010 to enable market participants – from farmers to international manufacturers of dairy products – to efficiently manage price risks inherent within the global dairy markets.
NZX now has a suite of eight futures and options contracts across dairy ingredients such as Whole Milk Powder (WMP), Skim Milk Powder (SMP) and Butter (BTR).
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“Our partnership with NZX demonstrates that exchanges can collaborate for mutual benefit and the betterment of the wider industry. With its rising population and changing demographics, Asia will remain one of the largest consumers and importers of New Zealand’s dairy products,” says SGX CEO Loh Boon Chye.
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“We believe our successful commodities derivatives franchise, with its established infrastructure and ecosystem, coupled with our global distribution network and strong Asian footprint, will enable us to work with NZX to fuel growth in the dairy derivatives market,” Loh adds.
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Mark Peterson, Chief Executive of NZX, said a partnership with SGX would be a showcase example of commercialising NZX’s international alliance strategy and would propel future growth of the dairy derivatives suite.
“This opportunity offers a further acceleration in liquidity for our global dairy derivatives contracts by harnessing greater access via SGX’s global network of trading and clearing firms, while leveraging NZX’s dairy market expertise, insight and ongoing marketing and sales in a franchise that has been built from the ground up,” adds Peterson.
The partnership is expected to be confirmed by 1H2021.
As at 4.05pm, shares in SGX are trading 9 cents higher or 1.0% up, at $9.19.