Abaxx Technologies Inc., a financial software company, majority shareholder of Abaxx Singapore Pte. Ltd., the Abaxx Commodity Exchange (ACX), and producer of SmarterMarkets™ Media, announced that Abaxx Singapore Pte. Ltd.’s subsidiary, Abaxx Exchange Pte. Ltd., has submitted a Notification of Impending Listing of Futures Contracts to the Monetary Authority of Singapore.
• Abaxx Exchange Pte. Ltd. submits LNG futures contract specifications for regulatory review
• The initial portfolio of LNG futures contracts include North West Europe, North Asia Pacific and United States Gulf of Mexico benchmarks
• Research and Commercial teams publish whitepaper, “Back to the Future(s): The Best Commodities Benchmarks Are Still Physically-Settled”
On January 20, 2023 Abaxx Exchange Pte. Ltd. submitted a Notification of Impending Listing of Futures Contracts to the Monetary Authority of Singapore. The futures contracts are designed to address the price discovery and risk management needs of energy market participants trading Liquified Natural Gas (LNG). Notice is required for all new products to be listed at launch and subsequently.
In collaboration with industry market participants, Abaxx identified opportunities to introduce a suite of 3 regional contracts including: North West Europe, North Asia Pacific and United States Gulf of Mexico. Abaxx Exchange contracts are designed for the dual commercial objectives of creating a large pool of liquidity for price discovery and risk transfer. The Abaxx contracts structure was determined at the conclusion of comprehensive deliberations with energy market participants.
Launch of the Recognized Market Operator and Approved Clearing House as well as the futures contracts intended to be listed by ACX remain subject to final regulatory approvals.
"Asia continues to be the fastest-growing demand center for energy products and we believe our choice to operate out of Singapore positions us strategically to be at the global hub of commodity trading while benefiting from its robust regulatory framework. By bringing together experienced market practitioners and leading-edge technologists, we want to support practical, market-based solutions to address the biggest challenges in global commodities trading. Ultimately, our vision is to architect Smarter Markets, characterized by greater price transparency, enhanced security and seamless settlement to support the markets critical for the energy transition," remarked Nancy Seah, Managing Director of Abaxx Exchange.
The formative commercial thesis of Abaxx Exchange is that incumbent Exchanges and Clearinghouses have neglected the foundational tenets of commodity futures in relation to the risk management abilities afforded by physically settled markets. The commercial needs of the market are not currently being met. Benchmarks are vital to commodity markets in reflecting the values in the dynamics of production, storage and transport logistics.
On January 17, 2023, Abaxx Research and Commercial teams published a position whitepaper outlining the benefits of a global LNG benchmark with the option to complete a physical delivery transaction. This ability to be the “buyer or seller of last resort” enables market participants to have a more direct correlation and convergence with their waterborne LNG cargoes. Properly functioning benchmarks provide measurable metrics to compare the performance of commodities, supporting investors and traders in making informed decisions as well as providing a basis for setting prices and determining values of different commodities. Abaxx believes this important differentiator cannot be found in the financially-settled instruments that are currently being used in today’s global LNG markets.
“This is another step in the direction of providing key benchmark contracts required for precise, orderly and transparent pricing of crucial energy transition commodities,” said Dan McElduff, President, Strategy & Development, of Abaxx Singapore. “We have confidence in our approach to development which requires deep industry engagement with a diverse and capable array of market participants. Successful markets thrive on depth and diversity which is true in most things in life. It’s time for the LNG market to progress to the next level of liquidity which can only be achieved with an effective futures market.”