Intercontinental Exchange (ICE), a leading network of regulated exchanges and clearinghouses for financial and commodity markets, will start its five futures contracts for trading at ICE Futures Singapore next year. These include gold and mini-Brent crude oil.
Every mini-Brent contract will be one tenth of the size of Intercontinental Exchange’s Brent crude oil benchmark; the other contracts are for cotton and white sugar. All of these contracts will be settled in cash except for the one kg gold futures that will be physically settled.
An addition to the Intercontinental Exchange’s existing portfolio of Brent crude, sugar, mini-gold, cotton and a world cotton contract, to be shortly launched, the five new contracts will be unveiled on Mar 17, 2015.
Asia is among the fastest growing regions where commodity consumption is rising, thereby putting pressure on the policy makers to open up economies.
Adding to its current network of markets and clearing houses in the United States, Canada, Brazil, Britain and continental Europe, Intercontinental Exchange acquired the Singapore Mercantile Exchange for $150 million in order to enter the trading and clearing market in Asia.
By strengthening its foothold in Asia, Intercontinental Exchange intends to offer global and regional products, hence further expanding its network of clearing houses and exchanges.
However, Intercontinental Exchange’s gold contract has a tough competition in the Asian market, where already several contracts have been launched to offer a feasible price benchmark to the world’s biggest gold consuming economy.
The new contracts will be listed under ICE Futures Singapore and cleared by ICE Clear Singapore.
In other news, total contract volume of Intercontinental Exchange for the month of November declined 19% year over year and 16 % year to date, thereby affecting the revenues of the exchange. The launch of the five new contracts, resulting in Singapore exchange expansion, is expected to drive volumes in future given the rapidly developing Asian economy.
Additionally, later this year, CME Group Inc. (CME) is expected to launch a one kg gold futures contract in Hong Kong which will be delivered physically. The Singapore Exchange introduced a 25 kg contract earlier this year, while the Shanghai Gold Exchange launched three new physical gold contracts, with derivatives expected later.
Currently, Intercontinental Exchange sports Zacks Rank #1 (Strong Buy).
Other stocks worth considering in the same industry include CBOE Holdings, Inc. (CBOE) and Markit Ltd. (MRKT). Both the stocks hold a Zacks Rank #2 (Buy).
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