ANALYSIS: Abaxx Exchange says Asia deserves its own gold market

Having told FOW Abaxx Exchange plans its gold futures contract next month, the chair and chief executive of the Singapore-based commodities exchange and clearing house’s parent company Abaxx Technologies said gold’s recent record highs – with spot prices passing the $3,000 (£2,320) per ounce mark on March 14 and up 39% over the last 12 months – highlight the importance of a “more resilient and transparent pricing structure”.

“(This is) especially relevant as persistent price dislocations – driven by pandemic disruptions, geopolitical instability and tariff shocks – continue to impact the market. Gold's role as a global reserve asset has created distinct regional trading patterns that existing benchmarks don’t fully capture," said Josh Crumb (pictured) in an interview with FOW.

“As our chief economist David Greely has noted, Asia is a kilobar market – that’s not being matched in London and New York. The Asian market deserves its own marketplace and we think Singapore is natural for that. The launch of our gold contract, alongside our energy and battery metals contracts, reflects our broader strategy to introduce physically-deliverable benchmarks that more accurately reflect the commercial realities of today’s global markets.”

FOW Data shows trading in CME Group-owned Commodity Exchange’s (COMEX) gold futures (100 ounces per unit) was up 7% year-over-year to 3.9 million lots in February. COMEX’s e-micro gold futures (10 ounces per unit) trading volume rose last month 169% to 2.8 million contracts, according to FOW Data.

Abaxx told FOW it expects to launch gold kilo bar futures in April pending regulatory approval, having submitted the planned launch to the local regulator earlier this month. If the submission is returned without comment, the exchange can begin working with futures commission merchants (FCMs) to finalise a launch date, which will require two weeks’ notice, according to Crumb.

Crumb also said Abaxx’s gold futures contract and the upcoming launch of Abaxx Spot “reflect a strategic effort to build a smarter, more commercially aligned gold market”.

“Abaxx Spot will broaden access to the gold market by enabling registered participants to settle their transactions and transfers electronically through our gold pool, with bullion held physically in 99.99% purity kilobars in Singapore. This ensures alignment between the futures delivery point and the underlying physical market, improving price convergence and market efficiency,” the Abaxx Technologies chair and chief executive told FOW.

“Gold’s position as a safe haven asset is particularly relevant amid rising geopolitical uncertainty and economic instability, driving increased demand for more transparent and resilient market infrastructure. A key market driver in Asia is the growing disconnect between physical gold trading activity – particularly in the kilobar market – and existing benchmark structures centred in London and New York.”

The gold future will complement the lithium carbonate futures launched earlier this month and nickel sulphate futures that went live in January. They followed the nascent exchange’s launch in late June last year with liquefied natural gas (LNG) and carbon futures.

Gold should be considered as a high-quality liquid asset similarly to government bonds, according to an Abaxx Exchange advisor who argued the precious metal should also be recognised as eligible collateral.

Looking ahead, Abaxx Exchange told FOW it is targeting by the end of this year a “potential doubling” of its contract count, which currently stands at four increasing to five with gold, subject to regulatory review and approval processes.

Abaxx Exchange publishes daily order book and block trades data which showed on Tuesday some trading in the venue's two carbon credit futures contracts.

“Trading has been proceeding as expected, and with trading underway, more firms are approaching us each day to express their interest in onboarding and trading our energy, environmental and battery metals markets products,” Crumb told FOW.

“At this stage, connectivity and first trades across participants remain our primary focus rather than volumes. With our expanding product line, the benefits of firms onboarding to Abaxx Exchange continue to increase and make it easier for them to take on the significant effort of connecting to a new exchange and clearing house.”