Proposed Launch of Cleartrade Australia Premium Coking Coal Futures Contract

Transcription

1 Cleartrade Exchange Consultation paper Proposed Launch of Cleartrade Australia Premium Coking Coal Futures Contract 22 January 2015 Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 1

2 Responding to this consultation paper CLTX invites comments on this Consultation Paper between 22 January 2015 and 11 February 2015 via: Electronic mail: Mail: Cleartrade Exchange Pte Ltd 61 Robinson Road Unit 13-03A, Robinson Centre 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. 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 February 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 Private Limited 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 Private Limited grants confidential treatment, it will consider the comments but will not publicly disclose the information. If Cleartrade Exchange Private Limited 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 Private Limited 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 Australia Premium Coking Coal Futures Consultation Paper Page 2

3 Table of Contents Introduction Scope of Public Consultation Background... 4 Details of the Proposal Contract Specification Proposed Commencement of Trading... 6 Appendix: Cleartrade Coal Futures (CLTX C8-AA8) Contract Specifications... 7 Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 3

4 Introduction 1. Scope of Public Consultation Cleartrade Exchange Private Limited ( CLTX ) seeks public comment on its proposal to introduce CLTX C8-AA8 Futures contracts for trading on the Cleartrade Exchange trading platform. 2. Background 2.1. The CLTX C8-AA8 Futures contract expands 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 this contract, traders will be able to better manage their risk and cost in the energy market while being exposed to other range of complimentary products in freights, agriculture and metals CLTX proposes to list the C8-AA8 (TSI fob Australia Premium Coking Coal) Futures contracts for trading. The proposed contracts are standard, cash-settled futures contracts listed as contract months, quarters and calendar years. The contracts shall be listed up to a maximum of 24 months The listing of the CLTX C8-AA8 Futures contract on CLTX is subjected to the approval of the Monetary Authority of Singapore ( MAS ). Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 4

5 Details of the Proposal 3. Contract Specification 3.1. The contract specifications of the proposed CLTX C8-AA8 Futures are attached at Appendix CLTX seeks public feedback on the proposed contract specifications. In particular, CLTX seeks the public s views on the following: Trading Unit (Clause 2.3) The trading unit shall be one (1) lot which is 100 MT Position limits (Clause 2.6) The proposed position limits for the CLTX C8-AA8 Futures shall be determined by Clearing House, SGX -DC Price Limits (Clause 2.7) Trades for the CLTX C8-AA8 Futures contracts shall not be made, on any Business Day, at prices varying more than 12% above or below the closing prices of the preceding Business Day. When a single contract month is trading at the 12% Limit, Cleartrade Exchange will announce a 30-minute cooling off period for the specific contract month during which trading shall only take place within the 12% Limit. When at least 3 separate contract months are trading at the 12% Limit, Cleartrade Exchange will announce a 30-minute cooling off period for all contract months during which trading shall only take place within the 12% Limit. Following the cooling off period, all traded prices of either the specific contract month or all contract months (depending on the situation above) shall not vary more than 20% above or below the closing prices of the preceding Business Day ( the 20% Limit ) for the rest of the business day Termination of Trading (Clause 2.8) For a Month Contract, the Last Trading Day is the last Friday of the month in question. Quarters and Calendar years cease trading as a quarter/calendar year at the close of business day on the last Friday of the first month contract in that quarter/calendar year. Where the last Friday of the month is a non-business day, the expiry day will be the first business day preceding that Friday Final Settlement Price (Clause 3.1) In respect of daily settlement, the floating price will be the end of day price as supplied by The Steel Index (TSI). Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 5

6 The Final Settlement Price, as expressed as USD per mt, shall be the arithmetic average of all publications of The Steel Index (TSI) Premium coking coal (Australia Exports, fob East Coast Australian port) index for the corresponding contract month Final Settlement (Clause 3.2) Clearing Members holding Open Positions in the Contract at the time of termination of trading in the Contract shall make payment to or receive payment from the Clearing House in accordance with normal variation margin procedures, based on a settlement price equal to the Final Settlement Price. Question: A) Do you agree with the proposed addition of the Cleartrade Coal Futures (CLTX C8- AA8) contract specifications listed above? 4. Proposed Commencement of Trading 4.1. Subject to regulatory approval, CLTX proposes to commence trading in the 1 st quarter of 2015 Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 6

7 Appendix: Cleartrade Coal Futures (CLTX C8-AA8) Contract Specifications CLEARTRADE EXCHANGE COAL FUTURES (C8-AA8) CONTRACT SPECIFICATIONS 1. SCOPE OF CONTRACT SPECIFICATIONS AND DEFINITIONS 2. TRADING 2.1 Trading Months/Quarters and Hours 2.2 Product Structure 2.3 Trading Unit 2.4 Price Quotation 2.5 Minimum Fluctuations 2.6 Position Limits 2.7 Price Limit and Cooling Off Period 2.8 Termination of Trading 3. CLEARING AND SETTLEMENT 3.1 Daily Settlement Price and Final Settlement Price 3.2 Final Settlement 3.3 Other Rules and Procedures for Clearing and Settlement Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 7

8 1. SCOPE OF CONTRACT SPECIFICATIONS AND DEFINITIONS These Contract Specifications for the CLEARTRADE EXCHANGE Coal Futures (C8-AA8) Contract (the Specifications ) govern the trading of the CLEARTRADE EXCHANGE Coal Futures (C8-AA8) Contract on the CLEARTRADE EXCHANGE Market. The rules and procedures for trading that are not specifically covered in the Specifications shall be as set forth in the Trading Rules. Capitalised terms used herein and not otherwise defined shall have the meanings ascribed to them under the Trading Rules. For the purposes of the Specifications and unless the context otherwise requires, the following capitalised terms shall have the meanings set forth below: Clearing House Rules Contract USD Coal Coal Index Provider Contract Period MT Trading Rules Means the Clearing House Rules of SGX-DC ( which may be found on their website. Means the CLEARTRADE EXCHANGE Coal Futures (C8-AA8) Contract traded on the CLEARTRADE EXCHANGE Market which underlying reference is The Steel Index (TSI) Premium coking coal (Australia Exports, fob East Coast Australian port) Index. Means the lawful currency of the United States of America. Means the following Coal Products: C8: AA8 (TSI fob Australia Premium Coking Coal) The Steel Index (TSI) - A leading provider of impartial price information for key steel, scrap, coking coal and iron ore products around the world, based on spot market transactions. Means for a Month Contract it will be the First Index Day of the Month to last Index Day of the Month. For a Quarter Contract it will be the First Index Day of the Quarter to last Index Day of the Quarter where a Quarter Contract will be split equally into 3 Month Contracts on the Trading Day and settled as Month Contracts. For a Year Contract it will be the First Index Day of the Year to last Index Day of the Year where a Year Contract will be split equally into 12 Month Contracts on the Trading Day and settled as Month Contracts. Means metric ton where 1 metric ton = 1000 kilograms Means the Trading Rulebook of the Exchange which can be obtained by contacting the membership team at: membership@cltx.com Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 8

9 2. TRADING 2.1 Trading Months/Quarters/Years and Hours The Contract shall be listed for such Contract Months/Quarters/Years and scheduled for trading during such hours as may be determined by the Exchange. 2.2 Product Structure The Contract shall have a Product Structure out to a maximum of 24 months. 2.3 Trading Unit The trading unit shall be one (1) lot which is 100 MT. 2.4 Price Quotation The price quotation shall be USD per MT. 2.5 Minimum Fluctuations The minimum price fluctuation shall be $0.01 per MT. 2.6 Position Limits The Position Limits shall be determined by the Clearing House SGX-DC. 2.7 Price Limit and Cooling Off Period Trades of the coal futures contract in any of the future contract months, shall not be made, during one Business Day, at prices varying more than 12% above or below the closing prices of the preceding Business Day ( the 12% Limit ) except as provided below. When a single contract month is trading at the 12% Limit, Cleartrade Exchange will announce a 30-minute cooling off period for the specific contract month during which trading shall only take place within the 12% Limit. When at least 3 separate contract months are trading at the 12% Limit, Cleartrade Exchange will announce a 30-minute cooling off period for all contract months during which trading shall only take place within the 12% Limit. Following the cooling off period, all traded prices of either the specific contract month or all contract months (depending on the situation above) shall not vary more than 20% above or below the closing prices of the preceding Business Day ( the 20% Limit ) for the rest of the business day. Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 9

10 2.8 Termination of Trading For a Month Contract, the Last Trading Day is the last Friday of the month in question. Quarters, and Calendar years cease trading as a quarter/calendar year at the close of business on the last Friday of the first month contract in that quarter/calendar year. Where the last Friday of the month is a non-business day, the expiry day will be the first business day preceding that Friday. 3. CLEARING AND SETTLEMENT Settlement under the Specifications shall be by cash settlement. 3.1 Daily Settlement Price and Final Settlement Price In respect of daily settlement, the floating price of CLTX C8-AA8 will be the end of day price as supplied by The Steel Index. The Final Settlement Price, as expressed as USD per mt, shall be the arithmetic average of all publications of The Steel Index (TSI) Premium coking coal (Australia Exports, fob East Coast Australian port) index for the corresponding contract month. 3.2 Final Settlement Clearing Members holding Open Positions in the Contract at the time of termination of trading in the Contract shall make payment to or receive payment from the Clearing House in accordance with normal variation margin procedures, based on a settlement price equal to the Final Settlement Price. 3.3 Other Rules and Procedures for Clearing and Settlement The rules and procedures for clearing and settlement that are not specifically covered in the Specifications shall be governed by the Clearing House Rules. Cleartrade Exchange Pte Ltd Launch of Cleartrade Australia Premium Coking Coal Futures Consultation Paper Page 10