Pavel Hála

Introducing commodities in Singapore

Published March 11, 2024

We are thrilled to announce that we have obtained a license to distribute market data for SGX commodities!

 

Origins of commodity trading in Singapore

Singapore is a global financial center, arguably the most important one in Asia following the decline of Hong Kong in recent years. It is also a crucial commodity hub. In fact, it was the money from rubber trade that financed the establishment of local banks.

Singapore benefits from its position in the Malacca strait. A huge amount of finished goods pass through this strait, going from China to Europe and India. In the opposite direction, there is a flow of raw materials such as crude oil and LNG from the Middle East, and metals or agricultural commodities from Africa. This makes Singapore predestined to house a globally important commodity exchange.

The history begins in 1911 with the establishment of the Rubber Association of Singapore (RAS). It played a pivotal role in the trading of rubber, which was one of the key commodities in Singapore’s trading history. The RAS facilitated the trading of rubber futures, providing a structured marketplace for buyers and sellers to hedge against price fluctuations in the rubber market. This institution was integral to the development of Singapore as a major hub for commodity trading in the region, particularly during the time when rubber was one of the main exports of Malaysia and Indonesia, the neighboring countries of Singapore.

Another milestone came in 1992 when the Singapore Commodity Exchange (SICOM) succeeded RAS as a key platform for commodity trading. Unlike the RAS, which was focused on rubber, the SICOM exchange marked an expansion into a broader mix of commodities. This was no coincidence as the 90s was the period when China started its rise as a major economic power. Chinese large-scale investments in the under-developed infrastructure fueled a commodity boom. This translated into strong demand for price discovery and risk management for commodity producers and traders. And SICOM was perfectly positioned to fulfill this demand.

Finally in 2008, SICOM was fully acquired and integrated into the Singapore Exchange Group (SGX). These two exchanges initially existed independently, with SGX being founded in 1999. While SICOM was primarily a commodity exchange, SGX was focused on stocks, bonds, equity indices and their derivatives. The merger of these two exchanges created an even stronger entity with global reach, cementing Singapore’s status as top global financial center.

 

SGX data in the app

We have added data for these SGX commodities to the app:

  • SGX SICOM TSR20 Rubber
  • SGX SICOM RSS3 Rubber
  • SGX TSI Iron Ore CFR China (62% Fe Fines)

They are the most liquid contracts, offering the best trading opportunities. We will introduce them in two follow-up articles, providing practical tips on how to utilize these markets for the greatest advantage.

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Pavel Hála

Pavel is the founder and CEO of SpreadCharts.

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