Financial Technologies wins MAS approval for commodities exchange

Dec 6, 2009

The Monetary Authority of Singapore gives the green light to the establishment of the Singapore Mercantile Exchange, the creation of an Indian technology company.

Jignesh Shah, CEO at New Delhi-based Financial Technologies, has won approval from authorities in Singapore for his firm's subsidiary, Singapore Mercantile Exchange (SMX), to begin trading activity early next year.

Financial Technologies has a number of trading platforms and exchanges it has set up in Asia and Africa. Its first success was the 2002 launch of a trading system for derivatives on the National Stock Exchange in Mumbai. In 2004, the firm launched its first exchange, the MCX, for currency derivatives, also in Mumbai.

In 2005, Financial Technologies also launched the Dubai Gold & Commodities Exchange, a multi-currency electronic exchange specialising in precious metals. In 2008, it was given an ISO certification, meaning its technology and processes had been acknowledged to meet international standards.

Now the firm is aiming to introduce a pan-Asian multi-product commodity derivatives exchange based in Singapore. The Monetary Authority of Singapore last week gave it regulatory clearance in principle to start operations of the SMX in the first quarter of 2010.

SMX is meant to allow market participants globally to trade listed futures and options based on precious metals, base metals, energy, agriculture, currency pairs and commodity indices. Financial Technologies, the sole owner of the start-up, has also established a clearing and settlement house and will serve as the central counterparty for all trades done on SMX. Standard Chartered will provide electronic funds transfer and settlement services.

The CEO of SMX is Thomas McMahon, who was appointed in April after running the Hong Kong Mercantile Exchange as well as having served as director of NY Mercantile Exchange Asia.

Authorities in Singapore have made clear their desire for the Lion City to serve as the region's trading hub, in commodities, equities and fixed income. Approval for SMX follows on the recent move by Singapore Exchange to launch a dark pool joint venture with Chi-X, for example. Given the demand among Asian investors for gold, resources and commodities, Singapore hopes to challenge Hong Kong in this time zone.

SMX's chairman is Ang Swee-Tian, former president of Singapore Exchange.