(SINGAPORE) Singapore Exchange will launch contracts for gold, coffee and fuel oil early next year and invest heavily to support high-tech trading, new chief executive Magnus Bocker said yesterday at a derivatives industry conference.

'I think there is a great opportunity for Singapore and SGX to be more in the forefront of trading and clearing of energy products,' Mr Bocker, who took over from Hsieh Fu Hua this week, told reporters.

SGX will launch a Fuel Oil 380 CST futures contract in the first quarter, he said, while SGX subsidiary Singapore Commodity Exchange (Sicom) will offer gold and coffee contracts and the clearing of over-the-counter rubber contracts from the first quarter of next year. Sicom is now primarily focused on rubber.

A competing commodity exchange, Singapore Mercantile Exchange, this week said it could launch 30 derivative products by the first quarter next year, with nine already approved by the authorities.

Singapore is a major foreign exchange and oil trading centre and also has a strong global position in various over-the-counter traded derivatives but the challenge for SGX is to tempt more of that volume onto its trading or clearing platforms. Yesterday, SGX said trading in its iron ore swap contract has surged to record highs since it was launched.

Mr Bocker said the exchange's present clearing system for OTC energy, freight and bulk commodity derivatives had 'seen some success' and will soon be expanded to accommodate financial derivatives, possibly interest rate swaps. A new derivatives clearing engine is due to be launched on Monday.

Trading in derivatives, especially energy products and other commodities, is seen as a promising growth area and Mr Bocker said SGX needed to invest to support the needs of tech-based trading firms. Algorithmic trading currently represents a quarter of its derivatives volumes, compared to about 11 per cent a year ago.

'Tech-based (traders) look at the products and the liquidity of the products and when they look at Singapore they find those opportunities. Hopefully liquidity feeds liquidity,' he said.

While in the equities market the exchange has been criticised regularly over perceived conflicts of interest due to its twin roles as market regulator and market operator, Mr Bocker defended the present setup as 'very good' compared to most other options.

'My experience from exchanges all over the world, having a regulatory arm within the exchange is extremely important,' he said. 'The distinction of responsibility between SGX and the Monetary Authority of Singapore today is a very good way to run a financial market.'

Mr Bocker admitted that in the cash equity market SGX still lagged Hong Kong as it did not have good access to a pipeline of large Chinese listings.

'But if you foresee that and put that aside, I think we've been very competitive, we've been very good at attracting new companies and keep existing companies at the SGX listed,' he said. 'This is not the (type of) competition where in certain areas you can run small companies. If you want to compete globally, you need to work and see yourself as a global competitor.'

Mr Bocker neatly sidestepped questions on governance issues and scandals that continue to dog some Singapore-listed companies.

'I've had the fortune to be at Nasdaq-Omx exchange, we had nearly 4,000 listed companies. I would say we had issues every day, it's part of capital markets that you have issues with companies every day.'

'My role is to see that we run and operate the markets in a coherent and professional way ... but that doesn't mean that all companies will always prosper and grow. This is risk capital.'