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Top Asian rubber producers Thailand, Indonesia and Malaysia are planning a regional exchange that will allow physical trading of the commodity, an official with the Malaysian ministry said on Friday.
The exchange, targeted to be set up within 18 months, is expected to facilitate hedging among producers and consumers of rubber and ease physical transactions among the three countries which produce nearly 70 percent of the world’s natural rubber.
“It will be a central clearing house to link the three natural rubber exchanges,” said the official, who is directly involved in the planning but declined to be named because the plan is still under study.
“Now, if a Thai trader wants to buy Malaysian rubber, he needs to get in touch with a Malaysian trader. But with this regional exchange, he can directly place the order.”
The planned exchange will initially launch physical rubber contracts for 30-day delivery and may be denominated in U.S.dollars, the source said. The plan is to eventually introduce futures contracts.
That may stoke competition between more established rubber futures contracts traded on the Tokyo Commodity Exchange and the Singapore Exchange.
“This will be an exchange among producing countries, whileTOCOM and SICOM are in consuming countries,” the source said.
The exchange could eventually be widened to include other rubber producing countries such as Vietnam, Cambodia, Laos andMyanmar if they decide to participate, the source said.
The location of the exchange and other details such as contract specifications are yet to be finalized, the source added.
Thailand, Indonesia and Malaysia on Thursday agreed to manage rubber exports to international markets to curb excess supply in a bid to shore up global prices that plunged to five-year lows in October.
Source: Rubber Journal Asia