Singapore's China-Backed Exchange to Start Trading on May 25

(Bloomberg) -- Chinese-backed Asia Pacific Exchange Pte said it will start trading in Singapore on May 25, the latest foray into overseas trading venues by mainland investors.

Apex will offer palm olein futures that will be dollar-denominated and physically delivered, it said in Thursday’s statement. The bourse will be the third derivatives exchange in the city-state, joining venues owned by Singapore Exchange Ltd. and Intercontinental Exchange Inc.

China has seen several outbound investments in trading venues as part of its efforts to integrate into the global financial system, with deals for stakes in markets in Bangladesh and Pakistan, and a joint venture with Deutsche Boerse AG in Frankfurt. While those efforts have the backing of one or more mainland exchange, Apex is privately funded and led by industry veteran Eugene Zhu, who previously ran the Dalian Commodity Exchange and the China Financial Futures Exchange.

“As global trading in commodities and financial instruments gravitates towards the region, I am optimistic that our first listed palm olein physically deliverable futures contract denominated in dollars will meet the demands in the current market and has the potential to become the Asian pricing benchmark for palm oil,” Zhu said in the statement.

Zhu himself is a major investor in Apex, which has more than 60 employees. A unit of CEFC China Energy Co., the troubled energy giant, holds a 20 percent stake in Apex, according to corporate filings. Hong Kong Xinhu Investment Co. and Shanghai Chaos Investment also have stakes. Lim Hwee Hua, a KKR Inc. senior adviser who was Singapore’s first female minister, is Apex’s chairman.

The company is studying products including natural rubber, South American soybean, iron ore, crude oil and financial futures, Zhu said in an interview earlier this year.

“It’s testament to the fact that Singapore has made very good progress in establishing itself as both the gateway and a harbor within the global network,” Michael Syn, head of derivatives at Singapore Exchange, said in a Bloomberg Television interview on Friday, referring to Apex.

Palm oil is the world’s most widely consumed vegetable oil, found in goods such as ice cream, instant noodles and lipstick. Indonesia and Malaysia are the world’s top producers of the agricultural commodity, and futures on crude palm oil are most actively traded at Bursa Malaysia Derivatives. There is no major futures derivatives on refined palm oil. Refined palm oil on Dalian Commodity Exchange rose 1.8 percent on Friday, narrowing this year’s decline to 1.3 percent.

China’s offshore exchange efforts come as it slowly opens its domestic derivatives markets to overseas investors, with the aim of achieving greater global pricing power for key commodities. The Shanghai Futures Exchange and the Dalian Commodity Exchange started allowing foreigners to directly trade crude oil futures and iron ore contracts, respectively, earlier this year.

©2018 Bloomberg L.P.

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