China-Backed Singapore Bourse Gets Nod as Third Futures Exchange

Singapore paved the way for a third derivatives exchange in the city, a month after Deutsche Boerse AG called quits on its ambition for a futures venue in the Asian nation.

Asia Pacific Exchange Pte, backed by Chinese investors, has received licenses from the Monetary Authority of Singapore to operate a derivatives exchange and clearinghouse, Chief Executive Officer Eugene Zhu said in an interview on Monday. Apex, which has more than 60 employees, is scheduled to open in May with refined palm oil contracts, he said. Intercontinental Exchange Inc. and Singapore Exchange Ltd. already run derivatives bourses in the city.

A Chinese-backed offshore venue would dovetail with the mainland government’s drive to lift the country’s status in global financial markets. The Shenzhen and Shanghai stock exchanges have offered to buy a 25 percent stake in the Dhaka Stock Exchange, and in 2016 teamed up with others to acquire 40 percent of the Pakistan Stock Exchange.

“We’re not here to compete but here to complement Singapore Exchange, Intercontinental Exchange and Bursa Malaysia Bhd.,” said Zhu. “Singapore should be a center for commodities price benchmarks.”

Apex is studying products including natural rubber, South American soybean, iron ore, crude oil and financial futures, Zhu said.

Zhu formerly headed the Dalian Commodity Exchange as well as the China Financial Futures Exchange, and has also served as president of Shanghai Pudong Development Bank. Lim Hwee Hua, a KKR Inc. senior adviser who was Singapore’s first female minister, is Apex’s chairman.

Apex’s approval from MAS comes about a month after Deutsche Boerse dropped its plan for a derivatives exchange in the city.

A unit of CEFC China Energy Co., a firm that agreed to buy a $9 billion stake in Rosneft PJSC last year, holds a 20 percent stake in Apex, according to corporate filings. Other investors include Hong Kong Xinhu Investment Co., a unit of leading Chinese brokerage Xinhu Futures Co., and Shanghai Chaos Investment, which was founded by hedge fund manager Ge Weidong.

Palm oil is the world’s most widely consumed vegetable oil, found in goods such as ice cream, instant noodles and lipstick. Indonesia and Malaysia are the world’s top producers of the agricultural commodity, and futures on crude palm oil are most actively traded at Bursa Malaysia Derivatives. There is no major futures derivatives on refined palm oil.

Source: Bloomberg

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