October 15, 2020


SGX and NZX form global dairy derivatives partnership


Singapore Exchange (SGX) and New Zealand's Exchange (NZX) have formed a partnership that would have both exchanges work together to grow the latter's dairy derivatives market.


Both SGX and NZX will explore the listing of the latter's dairy derivatives contracts on SGX's trading and clearing platforms, with NZX bringing its dairy product development expertise and client relationships to scale growth and liquidity in the trading of dairy derivatives while leveraging SGX's global market connectivity, strong Asian presence and international distribution, an SGX news release said.


Market participants could expect augmented access via current and new trading and clearing channels, it added.


NZX launched its dairy derivatives market back in 2010, enabling market participants across the dairy production chain-from farmers to international manufacturers of dairy products-to efficiently manage price risks inherent within global dairy markets.


SGX Chief Executive Officer Loh Boon Chye said, "Our partnership with NZX demonstrates that exchanges can collaborate for mutual benefit and the betterment of the wider industry. With its rising population and changing demographics, Asia will remain one of the largest consumers and importers of New Zealand's dairy products".


Fuelling growth in dairy derivatives market


"We believe our successful commodities derivatives franchise, with its established infrastructure and ecosystem, coupled with our global distribution network and strong Asian footprint, will enable us to work with NZX to fuel growth in the dairy derivatives market", he added.


NZX CEO Mark Peterson, for his part, said a partnership with SGX would be a showcase example of commercialising NZX's international alliance strategy and would propel future growth of the dairy derivatives suite.


James Miller, chair of NZX, also explained that the intention of the partnership is to benefit all participants and put the New Zealand dairy industry on an equal footing with their global counterparts in their ability to manage risk.


The release said that over the coming months, NZX and SGX will consult with their respective market participants and stakeholders, and seek regulatory approvals related to the proposed global partnership. Should this process be successful, the partnership is expected to be confirmed in the first half of 2021.


The partnership builds on the Memorandum of Understanding signed between the two exchanges in 2018 to expand co-operation in the Asia-Pacific region and promote market development initiatives across multiple product sectors.