SGX will launch Asia’s first electricity futures market

Will also boost retail competition in Singapore's electricity market.

The Singapore Exchange (SGX) intends to launch the electricity futures market by end-2014. It said the futures market will help electricity generating companies and other market participants improve asset optimization and better manage risks.

Singapore’s Second Minister for Trade and Industry, S Iswaran said a futures market will also provide an alternative avenue for independent retailers to enter the market by enabling them to purchase longer-term hedges. The entry of such independent players can in turn further spur retail competition to the benefit of end-consumers.

SGX is also working closely with the Energy Market Authority, the Energy Market Company and market players to design the futures contract. It is also working out an arrangement with potential market makers to ensure sufficient liquidity for the trading of electricity futures.

Six power generation companies have indicated interest in working with the SGX to develop the futures market as market makers: Senoko Energy, Keppel Merlimau Cogen, Sembcorp Cogen, Tuas Power Generation, Tuaspring, and YTL PowerSeraya.