Singapore Exchange Limited (SGX) announced today that it has agreed with CME Group, Inc. to buy over the latter’s stake and discontinue the joint venture in Joint Asian Derivatives Pte Ltd (JADL).
JADL is a 50-50 joint venture company set up to develop the Joint Asian Derivatives Exchange (JADE) market. Singapore Exchange Derivatives Trading Limited (SGX-DT), a wholly-owned subsidiary of SGX, will purchase 5,000,000 shares, representing 50% of the issued share capital in JADL, from CBOT Singapore Pte Ltd, which is part of the CME Group, Inc. for the cash consideration equivalent to 50% of JADL’s net asset value, subject to final adjustments. JADL’s net asset value as at 30 September 2007 is approximately S$2.27 million.
The share transfer is expected to be completed in mid-November 2007, at which time JADL will become a wholly-owned subsidiary of SGX-DT. The transaction is not expected to have any material impact on SGX’s earnings per share and net tangible assets per share for the current financial year.
JADL has developed commodity futures products, such as crude palm oil and rubber, that are listed on the market operated by SGX-DT and cleared by Singapore Exchange Derivatives Clearing Limited (SGX-DC).
"This development will be seamless and convenient for members and customers. These commodity products are already listed on SGX-DT and cleared by SGX-DC, and will soon also be traded on the SGX QUEST platform," said Benjamin Foo, head of Clearing and Commodities Business at SGX. "We will continue to offer these commodity products, and we remain committed to the development of the commodities market in Asia in partnership with market participants."
"We have a long-standing relationship of over 20 years with the CME Group. Although there is a change in the JADE joint venture, both exchanges have very strong collaboration in other areas like our mutual offset arrangement, and we will continue to seek new ways to work with each other," said Seck Wai Kwong, senior executive v.p. and cfo, SGX.
"We have always had an excellent relationship with SGX. Having SGX take the lead and owning JADE is the most cost-effective and logical next step to promote JADE and its products. The CME Group remains committed to Asia, and we will continue to explore ways to collaborate with SGX," said Phupinder Gill, president, CME Group.
