Monetary Authority of Singapore Annual Report 2010/2011
Our Work

Trading and Clearing Infrastructure

The financial crisis has triggered calls for regulatory reviews to improve transparency and strengthen risk management for derivative instruments. National authorities and international bodies such as G20 have embarked on efforts to strengthen regulation of the over-the-counter (OTC) derivatives market. Key initiatives include standardisation of OTC derivative contracts, mandating the trading of OTC derivative contracts on exchanges or organised trading venues, central clearing and trade reporting requirements for these instruments.

The fall out from the financial crisis saw an increase in demand from the industry for risk management solutions. Correspondingly, SGX AsiaClear, SGX's OTC derivatives clearing arm, saw a strong increase of more than 59% y-o-y in 2010 in the volumes of energy, freight and dry bulk related derivatives cleared on its platform. In November 2010, AsiaClear expanded its clearing services to include OTC financial derivatives starting with interest rate swaps denominated in Singapore and US Dollar. This will help strengthen risk management and transparency in the OTC derivatives market, and better support derivative activities in Singapore.

There have also been continual efforts to enhance our infrastructure for commodity derivatives trading. In August 2010, Singapore Mercantile Exchange (SMX) was launched in Singapore as the first Pan-Asian multi-product commodity derivatives exchange. In the second half of 2010, SGX and its subsidiary, SICOM, moved to consolidate their commodity contracts onto a single trading platform to integrate and enhance synergies between their commodity businesses. In February 2011, Cleartrade Exchange established a presence in Singapore to provide an electronic trading platform for OTC commodity derivative trades in a range of products, including Forward Freight Agreements. These developments continue to cater to the growing needs of market participants and contribute to the vibrancy and efficiency of Singapore's trading ecosystem.