The Singapore Commodity Exchange (SICOM) is a key commodity exchange for the trading of two of the world’s most important commodities, coffee and rubber. Its proximity to many producers of these commodities in the Indonesian archipelago and in wider South-East Asia and its location in one of the globe’s biggest container shipping ports means SICOM is perfectly placed to build on its previous success, and to come to pre-eminence in coffee futures and rubber futures. The addition of gold as one of the products available for trading at the Singapore Commodity Exchange has also added value, giving an solid new alternative for gold traders in South-East Asia and surrounding countries.
The Singapore Commodity Exchange as a distinct entity is relatively new, having been founded in 1992. However its roots go back much further: Singapore has long been a major trading centre for commodities and all manner of goods. But it was in the 1920s, as the popularity of mass production automobiles massively increased demand, that rubber began to be traded formally in Singapore, overseen by the Singapore International Chamber of Commerce Rubber Association. Its successor, the Rubber Association of Singapore, was privatised in 1992 to become the Rubber Association of Singapore Commodity Exchange (RASCE), and only two years later was renamed the Singapore Commodity Exchange, signalling the intent of its Board of Directors to expand into other appropriate commodities.
There are two main types of membership of the Singapore Commodity Exchange: Clearing Membership and Non-Clearing Membership. These two main types may be further split into a number of sub-categories, each with their own particular rights and responsibilities with respect to commodity trading.
- Clearing Membership:
- Clearing Brokers: these members are allowed to trade on the exchange on their own behalf, on behalf of related entities and on behalf of clients. They are also allowed to clear these trades.
- Clearing Dealers: Clearing Dealers may trade for themselves and for related entities, but not on behalf of any clients they may have. They are permitted to clear any trades they enact.
- Market Makers: these members have the same rights as Clearing brokers, and receive special incentives for attracting new exchange participants.
- Non-Clearing Membership:
- Non-Clearing Brokers: these members may trade on the exchange, and also trade on behalf of related entities and clients, however they may not clear these trades.
- Trade Members: trade members may trade on SICOM, and may also trade for related entities. However, they may not trade for clients, nor may they clear any trades they make.
- Associate Members: Associate Members of the Singapore Commodity Exchange have the same basic rights as Trade Members.
- Individual Members: individual members may belong to any of the other categories. The additional benefit they receive is a partial refund of specific charges if their account breaks its monthly trading limit.
- Market Makers: non-clearing Market Members operate as Non-Clearing Brokers, but with the addition of extra benefits on bringing new traders to participate in the market.
The Singapore Commodity Exchange trades in three main commodities: two agricultural commodities (coffee and rubber), and one metal commodity (gold). All of these commodities have long been important in South-East Asia: coffee and rubber have been cash crops since the colonial era, and as in much of the rest of the world gold has been a means of exchange since long before that.
The commodities traded on the Singapore Commodity Exchange are as follows (contract codes for the different contracts available follow in brackets):
- Agricultural Commodities: Robusta Coffee (CR), Rubber (Ribbed Smoked Sheet RSS3 – RT; Technically Specified Rubber TSR20 FOB – TF).
- Metal Commodities: Gold (LG).
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