The Singapore Exchange (SGX) will be launching new styrene monomer and monoethylene glycol swaps and futures contracts on October 23 this year, according to an SGX Tuesday.
This will be the first time derivative contracts for SM and MEG have been offered by any clearing house in Singapore.
The swaps are to be traded in 500 mt lots, while the futures contracts will trade in 100 mt increments.
"SM and MEG have traditionally been traded on an over-the-counter (OTC) basis between counterparties," an SGX spokesman said.
Benefits of trading SM and MEG derivatives contracts on SGX include reduced counterparty risk, no delivery risks, as well as margin offsets with other SGX petrochemical products such as benzene, according to an SGX presentation.
"The correlation between SM and benzene is typically about 80%," an SGX spokesman said.
SGX launched benzene-naphtha derivatives and paraxylene-naphtha derivatives indexed against S&P Global Platts markers on March 27.
"SGX will also be able to provide a single clearing arrangement for clients to trade and clear with multiple counterparties," the spokesman said.
"Also, currently there is no clearing house that offers US dollar based SM and MEG derivative contracts. These new products will fulfill the industry's need for such risk management instruments," the spokesman added.
