Singapore Exchange’s (SGX) global physical benchmark SICOM Rubber Futures contracts achieved a new record month in June with 40,679 lots traded, surging 53 per cent higher than a year before.
Open interest also achieved a new high on 27 June 2014, hitting 29,679 contracts or 148,395 tonnes.
Volume traded in the first half of 2014 hit 1.06 million tonnes, representing a 30 per cent increase over the same period last year.
The rapidly rising trading interest in the SGX SICOM Rubber Futures market follows increased activity by financial participants including banks and proprietary trading companies – from 22 per cent of the market in 1Q2014 to 29 per cent in 2Q2014. This has directly resulted in the tightening of bid/ask spreads, which has provided better pricing opportunities and allowed physical participants to meet their hedging needs more efficiently.
The SGX SICOM Rubber Futures are also being increasingly used as effective hedging tools by Natural Rubber Producers (illustrated by the increase in market composition from 13 per cent to 16 per cent) as the futures contracts are physically settled via a well-established delivery process.
In addition, the SGX SICOM Rubber Futures are denominated in US Dollars, in line with physical trading practices – this eliminates the currency risk inherent in trading and hedging using other markets.