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SGX Launches New Futures Trading Rulebook And Clearing Rules To Meet New Market Initiatives

Date 11/09/2006

The Singapore Exchange (SGX) has completed a major revision of its existing Derivatives Trading Rulebook after two rounds of public consultations. The new and improved Rulebook better caters to the key regulatory and market developments of the industry including the launch of a new commodities futures market called JADE. The new Futures Trading Rulebook will come into effect on 22 September 2006.

“After careful review of the feedback from the public and market participants, we have revamped the futures trading rules to better address the changes in the marketplace. The new SGX Futures Trading Rulebook is timely as we move towards a fully electronic trading environment and introduce deliverable commodity futures contracts on JADE. The Rules are introduced to support the operation of an efficient, fair and robust market. This marks another milestone for SGX as we continue to respond to the evolving financial landscape in Singapore and the region,” said Ms Yeo Lian Sim, EVP and Head of Risk Management and Regulations Group, SGX.

A. NEW FUTURES TRADING RULES

  • The new Futures Trading Rules. The new Rules will come into effect on 22 September 2006. The key changes include a new membership framework, a physical delivery framework as well as refinements to the enforcement regime for members, registered representatives and approved traders. The new Rules will make a clear distinction between the JADE market and the SGX-DT market, and have market-specific rules on error trade policies and trade matching algorithms. Both markets are operated by SGX under its approval as an Approved Exchange.

  • Clearing Rules for JADE. The Clearing Rules have been supplemented to introduce the clearing of physically-delivered JADE contracts. The Clearing House’s role in facilitating exchange of title documents for payment and acting as an escrow agent to secure the satisfactory delivery of the underlying commodity are now included in the Clearing Rules. The Clearing Rules have also been amended to articulate the factors taken into account when determining the daily settlement price for exchange-traded contracts.

  • TSR 20 Rubber Futures Contract Specifications. JADE’s first futures contract, TSR 20 Rubber Futures Contract, will begin trading from 25 September 2006. The detailed delivery terms and other obligations of TSR 20 Rubber Futures Contract are now available at www.jadeexchange.com.

  • Liberalised Access Policy. The changes will liberalise connectivity to markets as it will enable qualifying offshore proprietary trading firms, arcade operators and brokers who may not be SGX members, direct and faster access to the marketplace. The new Futures Trading Rules and Clearing Rules for JADE are available on SGX’s website, www.sgx.com, from today.

    B. NEW MEMBERSHIP FRAMEWORK

    As part of SGX’s strategy to widen its distribution network, new membership structure has been introduced to cater to the increasing growth of cross border participation in the electronic trading environment.

    To better reflect the types of businesses that SGX members operate, the existing membership categories have been streamlined and reorganised from the current six categories into two broad categories, Trading Member and Clearing Member. Trading Members who do not handle customer funds are further categorised as Trading Member (Proprietary) and Trading Member (Individual), the latter formerly known as Locals. The new membership framework will be:-

    • Clearing Member
    • Trading Member
    • Trading Member (Proprietary)
    • Trading Member (Individual)

    Existing members will be migrated into the new membership categories from 22 September 2006.

    To assist SGX members on the changes to the rules, SGX will conduct a briefing for risk management, compliance and operations personnel of member firms on 14 September 2006.

    Please refer to the following documents below the New Futures Trading Rulebook and Clearing Rules:-

    a. New Futures Trading Rulebook
    b. New Clearing Rules
    c. TSR 20 Rubber Futures Contract Specifications
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