The Steel Index

The Steel Index

April 26, 2009 19:00 ET

TSI Iron Ore Price to Settle SGX Swaps Launched Today

Singapore Exchange today launched the world's first clearing facility for OTC iron ore swaps using The Steel Index (TSI) iron ore reference prices for settlement.

LONDON, UNITED KINGDOM--(Marketwire - April 27, 2009) - For the first time, the iron ore sector and financial community can trade Over-the-Counter (OTC) iron ore financial products without bilateral counter-party credit risk. The contract uses TSI's 62% Fe reference price for fines delivered to China for settlement and is cleared through the Singapore Exchange's AsiaClear platform.

The Steel Index compiles its reference prices using a rigorous and verifiable methodology, based entirely on actual spot transaction data submitted by industry participants.

"This is a landmark step in the development of price risk management tools for the iron ore sector," says Steven Randall, Managing Director of TSI. "Singapore Exchange's selection of TSI recognises the market acceptance of our iron ore reference price and endorses the value of our rigorous methodology. We are delighted to collaborate with the Exchange for its settlement of iron ore swaps".

Rising iron ore price volatility and uncertainty about future price movements mean miners, traders and steel mills are increasingly looking for tools to manage the price risks involved in selling and buying iron ore. OTC trading of iron ore swaps began in May 2008 and attracted widespread interest. Singapore Exchange clearing provides the iron ore sector with the opportunity to mitigate counter-party risk in OTC trades.

Ms Elena Sng, Senior Vice President, AsiaClear and Clearing and Commodities Business at SGX said, "We are pleased to partner The Steel Index in the development of a cleared iron ore swap contract. With TSI's strong support, we seek to bring greater efficiencies to OTC iron ore market participants."

SGX's iron ore swap contract lot size is 500 metric tonnes and is cash-settled on the average of TSI's 62% Fe iron ore reference prices in the expiring month.

Note to Editors:

Singapore Exchange Ltd (SGX) was inaugurated on 1 December 1999, following the merger of the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX). SGX aims to offer a highly trusted, comprehensive and efficient securities and derivatives marketplace for raising capital, risk transfer, trading, clearing and settlement. SGX facilitates the trading and clearing of commodity futures and OTC derivatives such as forward freight agreements and oil swaps. For more information: www.sgx.com

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