The MECO futures contract on SGX will follow similar contract specifications as the very successful TOCOM MECO futures contract, except that it will be denominated in USD/barrel instead of JPY/kilolitre. SGX and TOCOM will work towards the fungibility of their respective contracts so as to deepen the contracts' liquidity and margin efficiency for their market participants.
Under the agreement, both exchanges will also explore the possibility of further cooperation in other products, and in the joint development of new risk management tools to meet the needs of investors and traders in the region.
Mr Thomas Kloet, CEO of SGX said, "We are extremely pleased to have TOCOM, one of the most successful commodities exchanges in the world, as our alliance partner in commodity derivatives. We believe that the liquidity in TOCOM's oil derivatives contracts, together with the participation of international oil refiners and traders based in Singapore and the Asia-Pacific region, will create the right synergies for our partnership."
Mr Tadayoshi Nakazawa, chairman of TOCOM said, "We are delighted to work with SGX, one of the world's most innovative equities and derivatives exchanges, on these initiatives. We strongly hope that this cooperative relationship will strengthen the core functions of futures markets - to hedge risk and achieve price discovery - in the Asia-Pacific region, and contribute to the market development of both Exchanges. We also expect that our relationship with SGX will evolve into a partnership where we would be able to offer more trading opportunities to market participants of both Exchanges."
