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C THE FINANCIAL SECTOR: PERFORMANCE AND GROWTH  
  Financial Market Activity 58
 
Active Corporate Debt Market  
58
 
Box 13 – Introduction of Electronic Bond Platform for
 
Trading of Singapore Government Securities  
59
 
Growth in Asset and Wealth Management  
60
 
Trading in the Equities and Futures Market  
60
 
Strong Growth in the Treasury Market  
61
 
Box 14 – Islamic Finance Development in Singapore  
62
 
Box 15 – Regional Commodity Derivatives Trading  
64
 
  FINANCIAL MARKET ACTIVITY

Box 15 Regional Commodity Derivatives Trading
 

As a sign of the growth of commodity derivatives trading in Singapore, several global banks have set up their regional trading desks here. At the same time, existing commodity players have continued to expand their operations here. These developments are in response to the increased demand from Asian clients, most notably in energy and metals on over-the-counter (OTC) markets.

Singapore is developing several initiatives to facilitate the growth in commodity derivatives trading.

 

  Strengthening Market Infrastructure
 

One important initiative is strengthening the market infrastructure for commodity derivatives. The growth in commodity derivatives in Asia is creating a demand for a central counterparty clearing facility. Such a facility would mitigate counterparty risks and bring about operational efficiencies for the marketplace.

The SGX has taken the lead in developing and implementing an OTC clearing facility, initially covering a product range of two wet forward freight agreements (FFAs), nine dry FFAs, and seven energy derivatives. The facility was officially launched on 16 May 2006.

 

  Establishing an Asian Commodity Derivatives Market
 

To meet the increasing demand for hedging Asian product prices, SGX and the Chicago Board of Trade (CBOT) formed a 50/50 joint venture company to establish a commodity derivatives market known as the Joint Asian Derivatives Exchange (JADE). Palm oil futures and rubber futures are among the initial suite of Asian commodity derivatives being developed. All trades will be cleared by the SGX derivatives clearing house. JADE is targeted to be launched by the end of 2006.

 

  Building a Pro-business Environment
 

To further grow the commodities market, two initiatives were introduced to encourage the trading and clearing of commodity derivatives:

Enhancement of the Commodity Derivatives Trading (CDT) Scheme to offer financial institutions and intermediaries concessionary tax rates on income derived from trading in commodities derivatives, including FFAs.
Concessionary tax rates on income derived from the provision of clearing services in Singapore.