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SGX plans to trade its US$-denominated MECO Futures Contract on the SGX Electronic Trading System upon regulatory approval. Although TOCOMhas been successfully trading a similar Yen-denominated MECO Futures Contract, it will be adjusting its settlement method to use only Platts' prices, from the listing of the next (or contract month) MECO Futures Contract. is planning to change its rules on its crude oil contract to use Platts' prices in the calculation of the final settlement price, subject to the approval by relevant committees.
Both exchanges will work towards aligning their contract specifications for product fungibility so as to deepen contract liquidity for market participants.
Mr Ang Swee Tian, President of SGX, said, "The Exchange has spent considerable efforts in consultations with active market participants in the oil trading and risk management industry. We believe our co-operation with TOCOM and Platts would allow us to serve the Asia-Pacific and international oil market participants in a more positive and transparent manner for their trading and risk management needs."
Mr Tadayoshi Nakazawa, Chairman of TOCOM, said, "TOCOM has been in continual discussion with our members and the oil market participants in Japan, and based on market feedback, we have agreed to make changes to our settlement method and Last Trading Day. Through such changes which are in sync with market demands, we hope to make our MECO Futures Contract into a more successful contract.TOCOM is pleased to reach an agreement with Platts, which has a great influence on the world's oil trading, and SGX, one of the world's most innovative equities and derivatives exchanges. By using Platts' prices, which is the benchmark for Middle East crude oil destined to Asia, the correlation between futures and physical markets will be strengthened, and the hedging function of our Exchanges will be enhanced. TOCOM will exert our possible efforts to improve usability and credibility of its market by reviewing and fine-tuning our crude oil futures contract."
"The convergence between Platts Middle East assessments and the SGX/TOCOM settlement mechanism will enable crude producers, consumers and traders to have a hedging tool to perfectly match their financial exposure with their loading volumes," said Harry Sachinis, President of Platts. "Platts is confident that users will be pleased to have a futures contract that will derive its value fully from the physical commodity as it normally trades and prices."
SGX MECO Futures Contract will be available for trading on the SGX Electronic Trading System (ETS) from 8.00 am to 7.00 pm on regular trading days and from 8.00am to 5.30pm (Singapore Time) on the Last Trading Day (last Singapore business day). The contract size will be 1,000 barrels and contracts will be listed for 6 serial months.
TOCOM MECO Futures Contract will be available for trading from 9.00 am to 11.00am and 12.30 pm to 3.30pm (Tokyo Time). The contract size will be 100 kilolitres and TOCOM will similarly list its contracts for 6 serial months.
