SGX is in the race to buy Baltic Exchange. Reuters

The Singapore Exchange (SGX) said it is in the race to buy based Baltic Exchange which produces daily benchmark rates and indices that are used across the world to trade and settle freight contracts.

The SGX said on Friday that it has submitted a non-binding offer to acquire the global shipping market hub.

The London Metal Exchange, CME Group, ICE and Platts are some of the competitors for SGX in the run to own the shipping exchange.

The Singapore exchange said its discussions are still preliminary and there is no certainty that it will materialize.

The Baltic Exchange compiles the Baltic Dry Index, which measures changes in the cost to transport raw materials such as metals, grains and fossil fuels. Being a proxy for global supply and demand trends, this index is helpful to indicate future economic growth.

All is not well at SGX where stock trading volume and initial public offerings have plunged so expanding business through buyouts etc is crucial for the Singapore exchange.

The news has been taken positive by the market as the price of SGX shares has risen more than 1.7% Friday at S$7.13.

This deal makes the first major foreign investment by SGX after the current chief executive Loh Boon Chye has taken over from Magnus Bocker.

In 2011, SGX had made a $8bn bid for Australian exchange ASX but the Australian government had rejected it citing national interest. The bid for the Baltic Exchange makes next big move by the Singapore exchange.

Buying out a shipping exchange is important for the Lion City also because it wants to multiply its maritime business.