Singapore Exchange Limited (SGX) announced today that SGX AsiaClear® will launch the clearing of over-the-counter (OTC) Benzene Swaps contracts on 5 May 2008. SGX is introducing this world’s first clearing of Benzene Swaps in response to the petrochemical market’s need for a credit risk mitigation facility.
The size of each Benzene FOB (Free-On-Board) Korea Swaps contract is 500 metric tons. It will be cash settled based on the monthly average of Platts’ daily spot marker physical cargo assessments in the contract month.
Benjamin Foo, SGX head of Clearing, Commodities and AsiaClear said, "SGX has been working closely with OTC and petrochemical market participants to introduce Benzene Swaps to meet their trading and risk management needs. This product complements SGX’s suite of OTC oil contracts."
"Asia is an important pricing centre for aromatics. The launch of the SGX Benzene Swaps clearing facility is timely as there is a need for such a service in the petrochemical market. This service will help to create a more active Benzene paper market for traders and producers to manage their price and counterparty risks." said Simon Chua, vice president, Summit Petrochemical Trading Inc.