Singapore Exchange (SGX), the city-state's major bourse, announced the launch of SGX Iron Futures Indices in response to the growing demand for iron ore.
A statement by the SGX said SGX Iron Futures Indices is a suite of inverse and leveraged indices calculated off the SGX TSI Iron Ore CFR China Index Futures.
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Additionally, this is the first series of SGX commodity-base indices to be utilised as a reference point for tradeable products. It will be licensed to a Korea-based securities and investment firm Daishin Securities.
SGX Head of Commodities William Chin said the SGX Iron Futures Indices will be made up of two total return indices. This will, in turn, offer investors both long and short exposure to the seaborne iron ore market based on the underlying US dollar-denominated SGX Iron Ore Futures.
"With demand for iron ore linked directly to industrialisation across the globe, and particularly in Asia, iron ore has emerged as a robust barometer of global economic activity," he said.
Meanwhile, SGX Index Edge Head Simon Karaban noted that these new iron ore indices will provide investors with a new platform to track and access a highly dynamic market.
"They build on SGX's expertise in iron ore price discovery, which is illustrated by the growing liquidity and depth of our iron ore futures market," Karaban said.
Apart from being Asia's leading market infrastructure, SGX has also been a global leader in international iron ore derivatives. In the past twelve months leading to June 2017, it has traded 1.64 billion tonnes, representing over 90% of the seaborne iron ore market.