CME Group has abandoned the Joint Asian Derivatives Exchange
(JADE) project, selling its 50% stake in the venture to
co-owner Singapore Exchange (SGX) for just S$1.14m
CME Group inherited the stake when it acquired Chicago Board of
Trade (CBoT) earlier this year, but as early as October 2006
long before the takeover was completed doubts
were being raised about the new owners commitment to the
A transfer of ownership was hinted at in September when SGX
announced that JADEs contracts would be transferred to
its own QUEST trading system in January 2008, having previously
traded on E-CBoT and been cleared by SGX. The transfer will
remove any operational utilisation of CME Group systems, and
the equity purchase confirms the Chicago exchanges
abandonment of the project.
A source familiar with JADE told FO Week that
Singapore Exchange (SGX) was given the contractual option of
taking full control over the exchange if CBoT was sold. As such
SGX decided to take the reigns.
Despites SGXs purchase there remains significant
doubt about JADEs long-term future, with its parent only
willing to offer a guarded commitment to the platform. Although
Benjamin Foo, head of clearing and commodities business at SGX,
said the senior exchange will continue to offer the
crude palm oil (CPO) and rubber futures listed on JADE, he made
no specific reference to the subsidiary in SGXs ongoing
commitment to the development of the commodities market
in Asia in partnership with market participants.
JADE has failed to attract significant volume to either of its
products since the exchange launched rubber futures in
September 2006. Although delays to the launch of CPO, thanks to
the collapse of a pricing deal with Bursa Malaysia, were
initially blamed for the slow start, that contract has also
been lightly traded since it was eventually listed in June this
year. Promises of additional contracts have not come to pass;
market participants now doubt they will ever emerge, with SGX
believed more likely to centralise commodities markets at the
Both SGX and CME have insisted that the failure of JADE as a
joint venture will not affect their working relationship. Seck
Wai Kwong, senior EVP and CFO at SGX, said the two exchanges
have very strong collaboration in other areas like our
mutual offset arrangement, and we will continue to seek new
ways to work with each other, while Phupinder Gill,
president at CME Group, said his firm remains committed
to Asia, and... will continue to explore ways to collaborate
Exchange officials also struggled to make JADE a global
marketplace as the Monetary Authority of Singapore (MAS) failed
to approve key measures that would have allowed for more
international access to JADE.
MAS just isnt ready to go global, the source
said. All the exchanges have access hubs in Singapore and
there is no issue with them from the market participants
connecting directly. But when you look at SGX, MAS would not
allow them to compete on the same terms.
With such regulatory hurdles ahead, it seems likely that JADE
will operate as a domestic market, the source said.
Michael Coleman, a JADE member with Aisling Analytics in
Singapore told FO Week that JADE may benefit from full
ownership by SGX.
JADE clearly needs a make over and a re-launch,
Coleman said. SGX seems to be keen on revitalising and
potentially the 100% ownership by the local player is
According to SGX, the transfer of ownership will be complete by
mid-November. The negligible residual value of JADE was
confirmed by SGXs prediction that the purchase will have
no impact on its own earnings per share or net assets per share
when it reports its annual results.
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