FOCUS: Liquidity begets liquidity, with SGX's 65% Fe iron ore contract seeing record open interest, traded volume

The 65% Fe iron ore derivative contract offered by the Singapore Exchange (SGX) registered record levels of open interest and monthly traded volumes in July 2019, with the contract seeing participation from a diverse set of physical and financial stakeholders in the iron ore value chain.

Open interest for the contract, which is settled on the basis of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao, was 1.95 million tonnes on Tuesday July 30, with traded volumes reaching 2.12 million tonnes in July, according to SGX data.
The traded volume and the open interest were at their highest levels since the contract was launched on December 3, 2018.
The contract has been traded by more than 50 market participants since launch. These include physical hedgers, bank traders and financial market participants, according to the SGX.
The contract was launched amid calls from the market for efficient risk mitigation tools for the iron ore market. The SGX sees the contract’s popularity lying in its ability to serve as a tool providing a more precise hedge for the high-grade ore segment.

SGX also offers the market an ability to hedge their exposure...

Published

Deepali Sharma

August 05, 2019

08:50 GMT

Singapore