LNG Spot Index Set to Launch on Singapore Exchange

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The Singapore Exchange is set to start up an index that will track the price of liquefied natural gas in the Middle East and Indian markets, the latest move by exchanges looking to establish a benchmark for this rapidly growing source of energy.

The exchange has already launched a spot price index for Asian LNG, known as Singapore SLInG.  It has also signed a memorandum of understanding with Japan’s Tokyo Commodity Exchange (TOCOM) to explore potential cooperation on derivative products.

The latest move is in collaboration with brokerage Tullett Prebon, for LNG delivered to ports in Dubai, Kuwait and India.

The LNG market doesn’t yet have a benchmark that provides a standard price used throughout the market, in the way that oil, for instance, has the Brent and West Texas Intermediate crude futures contracts.  The Singapore Exchange’s SLInG has yet to gain traction.

Major exchanges around the world are eyeing the rapid growth of the LNG market.

The two U.S. exchanges that dominate oil derivatives trading, CME Group Inc. and Intercontinental Exchange, are also planning to launch products that could make it easier to trade LNG. according to people familiar with the matter.

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Source: WSJ

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