Proposed Launch of Cleartrade Coal Options

Transcription

1 Cleartrade Exchange Consultation paper Proposed Launch of Cleartrade Coal Options 22 August 2014

2 Responding to this consultation paper CLTX invites comments on this Consultation Paper between 22 August 2014 and 11 September 2014 via: Electronic mail: Mail: Cleartrade Exchange Pte Ltd 6 Battery Road #24-04B Singapore (Attention: Mr Zhi Rui Ang) Comments should be organized in the following manner: Cover Page; Statement of Interest; Table of Contents; Summary of Major Points; Comments; and Conclusion. Supporting material may be attached as an annex. All submissions should provide reasoned explanation for any proposed revision to the rules should be provided. Participants are encouraged to identify the specific rule on which they are commenting. In any case in which a participant chooses to suggest revisions to the text of the rules, the participant should indicate clearly the specific changes to the text that they are proposing. All submissions should be made on or before 11 September Participants submitting commentaries should include their personal/company particulars as well as their correspondence address, contact numbers and addresses on the cover page of their submissions. Respondents to this Consultation Paper are asked to identify the specific proposal or rule that they are commenting on. Cleartrade Exchange Pte Ltd reserves the right to make known all or parts of any written submission and to disclose the identity of the source. Participants may request confidential treatment for any part of the submission that the participant believes to be proprietary, confidential or commercially sensitive. Any such information should be clearly marked and placed in a separate annex. If Cleartrade Exchange Pte Ltd grants confidential treatment, it will consider the comments but will not publicly disclose the information. If Cleartrade Exchange Pte Ltd declines the request for confidential treatment, it will return the information to the participants that submitted it and disregard it. In the interests of market transparency, participants should limit any request for confidential treatment of information submitted. Cleartrade Exchange Pte Ltd will not accept any submission that requests confidential treatment of all, or a substantial part, of the submission. This Consultation Paper is available for download from the CLTX s website at Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 2

3 Table of Contents Introduction Scope of Public Consultation Background... 4 Details of the proposal Contract Specifications Proposed Commencement of Trading... 7 Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 3

4 Introduction 1. Scope of Public Consultation Cleartrade Exchange Private Limited ( CLTX ) seeks public comment on its proposal to introduce the following new Coal Options contract for trading on the Cleartrade Exchange trading platform: - API2 cif Amsterdam-Rotterdam-Antwerp (ARA) Options - API4 fob Richards Bay Options (Collectively referred to as Coal Options in this consultation paper) 2. Background 2.1. The intended launch of the Coal Options contract expand CLTX s current suite of commodities products. It allows market participants to leverage on our risk management tools within a single platform. With the introduction of the Coal Options contract, traders will be able to manage their exposure in a more comprehensive manner while being exposed to other range of complimentary products in freights, energy and metals CLTX proposes to list the Coal Options contracts for block trading only. The proposed contracts are standard, cash-settled options contracts listed as contract quarters and years. The contracts shall be listed up to a maximum of 3 whole calendar years The listings of the Coal Options contracts on CLTX are subjected to the approval of the Monetary Authority of Singapore ( MAS ). Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 4

5 Details of the proposal 3. Contract Specifications CLTX seeks feedback on the proposed contract specifications. These Contract Specifications for the CLEARTRADE EXCHANGE Coal Options Contract (the Specifications ) govern the trading of the CLEARTRADE EXCHANGE Coal Options Contract on the CLEARTRADE EXCHANGE Market Coal Options (API2 & API4) Index Provider The index provider shall be Argus McCloskey. McCloskey is the world s premier source of news, analysis and data on international coal industry while Argus is an independent media organization that specializes in market reports containing price assessments and business intelligence reports relating to physical energy and related commodity markets Closing Price Provider The closing prices shall be provided by the London Energy Brokers Association Price Quotation The price quotation shall be USD per metric ton Minimum Price Fluctuation Minimum fluctuation of the Contract traded shall be USD Final Settlement Day The final settlement day shall be 30 days prior to commencement of the underlying Coal swap contract. Where this is a non-working day expiry will be on the business day immediately prior; e.g. the Calendar 2012 and Q contracts will expire on 02/12/ Termination of Trading For a Quarter Contract, the Last Trading Day is the Last Trading Day of the first month of the quarter. For a Year Contract, the Last Trading Day is the Last Trading Day of the first month of the year. Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 5

6 Trading Unit The trading unit shall be one (1) lot which is 1000mt Product Structure The contract shall be traded as quarters and years and have a Product Structure out to a maximum of 3 whole calendar years Option Type Options are European style and will be automatically exercised on the expiry day if they are in the money. If an option is out of the-money it will expire automatically. It is not permitted to exercise the option on any other day or in any other circumstances Option Premium The premium is paid at the time of purchase as agreed by the purchaser and seller and expressed in USD/mt Strike Prices The strike prices shall be the same as the strike prices available on LCH.Clearnet. New strikes will be created upon request at the discretion of the clearing house. Question: A) Do you agree with the proposed addition of Cleartrade Coal Options contract specifications listed above? Question: B) Do you agree with the proposed listing of Cleartrade Coal Options contract for block trading only? Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 6

7 4. Proposed Commencement of Trading Subject to regulatory approval, CLTX proposes to commence trading of the mentioned products in October Cleartrade Exchange Pte Ltd Launch of Cleartrade Coal Options Consultation Paper Page 7