THE Singapore Exchange (SGX) will launch an oil futures contract in the first quarter of next year, said the exchange's new chief executive Magnus Bocker yesterday.

This comes as the trading of instruments linked to commodities hots up here, with another commodities exchange set to start operations soon.

The new SGX contract - effectively a bet on the future price of oil - will be linked to bunker fuel, taking advantage of Singapore's status as the world's largest bunker fuel port with three million tonnes traded each month.

Mr Bocker, addressing the FIA Asia Derivatives Conference 2009 at St Regis Hotel, added that the Singapore Commodity Exchange (Sicom) - owned by SGX - will also look to expand its product base to include gold and coffee.

His comments came one day after the Singapore Mercantile Exchange (SMX) announced that it has received in-principle approval from the Monetary Authority of Singapore to operate a cross-border multi-product commodities exchange to be based here.

The SMX expects to launch as many as 31 commodity products. Nine of these already have MAS approval.

It aims to start trading in the first quarter of next year, and looks set to compete against SGX in commodities.

Other than Sicom, which deals mainly in rubber contracts, the SGX also owns AsiaClear, an over-the-counter clearing facility set up in 2006 for energy and freight derivatives. Last year,

AsiaClear said it cleared US$6.3 billion (S$8.7 billion) worth of contracts, up from 2007's figures of US$4.7 billion.

Playing down the competition, Mr Bocker said: 'The best thing about a well-functioning financial centre is there are many players. I think we need to always welcome a broad range of players... I am always very welcoming to new players... It broadens the number of products and services.'

He also said the SGX will keep investing heavily in technology platforms to maintain its competitive edge.

'Historically, for exchanges, for banks and brokers, you were located very closely with each other, you were sitting in the city or trading closely. In the future, you will see that many of our clients trading and working with the capital markets in Singapore will be somewhere else,' he said.

'And the only way for that to work very well, is that we give them a technology platform that is world-class.'

The SGX will invest in 'trading engines, clearing engines, front end, back end, CDP systems, everything,' he added.

The bourse's new derivatives clearing engine, SGXClear, is set to be launched next Monday.

jonkwok@sph.com.sg