Close on the heels of the government allowing resumption of futures trade in agricultural commodities, the Singapore Commodity Exchange and India's National Commodity and Derivatives Exchange has entered into a deal allowing cross-trading and clearing of certain products in both exchanges, according to a joint statement issued today.
The two exchanges would sign a 'heads of terms' agreement that would also allow SICOM create derivative products based on NCDEX's agricultural commodity index, the statement said. NCDEX commands about 90 per cent of India's trade in agricultural commodity futures.
The exchanges will designate new products in response to market demand and jointly market and promote these designated products, an NCDEX statement said. The commodity bourses did not specify which products would be included in cross-trading on the two exchanges, but said the parties would "designate new products to the cooperation in response to market demand".
Other areas for the proposed collaboration include the development of new products and cross-membership access, they said. However, the agreement depends on Indian government approval. The agreement inked in Singapore also allows cross membership access.
"We are delighted to be in partnership with NCDEX. We believe this will widen the product offering and market access for our respective market participants," SICOM Chief Executive Officer Jeremy Ang said.
NCDEX managing director and chief executive R Ramaseshan said, "We are seeing the entire focus of attention of commodity trading shifting towards the Asian region where our two countries will be providing the platforms for trading to a wider cross-section of traders across the globe through this agreement."
SICOM is Singapore's regulated marketplace for trading of commodity futures. Currently however it deals almost entirely in natural rubber.