Singapore Exchange to set up rubber bourse?

Singapore – The Singapore Exchange (SGX) is in preliminary talks to be part of a regional rubber exchange that would bring together the top three producing nations, Reuters has reported.

Industry sources told Reuters that SGX had a meeting late last month with the International Tripartite Rubber Council (ITRC), with regards to the creation of rubber exchange.

“SGX, whose SICOM futures contract is already the benchmark for the TSR20 rubber grade, has proposed several models for the regional exchange, including connecting commodity exchanges in the three countries to its platform to provide integrated trading, clearing and delivery,” a source with direct knowledge of the matter told Reuters.

ITRC members – Thailand, Malaysia and Indonesia – which contribute to nearly 70 percent of world rubber production – met in November 2014 when they agreed on setting up a rubber exchange within 18 months.

The three states agreed to “manage” the natural rubber exports to global markets and to ensure there is no excess supply that would contribute toward destabilising price.

A regional rubber market would provide a platform for better price discovery and effective hedging functions bringing benefits to producers, consumers and market players.

Market analyst LMC International is currently reviewing the viability of the regional rubber market for ITRC.