SGX Teams Up with Tullett Prebon, Launching Index Offering in Middle East

Photo: Bloomberg

Singapore Exchange (SGX) and Tullett Prebon have teamed up to launch a new liquefied natural gas (LNG) spot index in Dubai, Kuwait, and India (DKI), part of a burgeoning partnership that will look to foster improved price discovery and risk management in the region.

Dubai, Kuwait, and India are amongst the fastest growing locales for the trading of LNG spot indices – the two groups will be offering a DKI Sling, which includes reference price for LNG Delivered Ex-Ship across three countries, thereby offering an increase in spot trading volumes.

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The initiative follows on the heels of an earlier introduction this past January that portended a Q2 2017 launch date. The new offering will seek to provide an independent physical price marker as the industry moves away from oil-linked pricing and towards gas-on-gas pricing.

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In particular, Energy Market Company (EMC), SGX’s wholly-owned subsidiary, will act as the index administrator, also publishing the DKI Sling on Mondays and Thursdays. Tullett Prebon was responsible for developing the index, given its role as one of the world’s largest brokers of physical LNG cargoes.

According to Michael Syn, Head of Derivatives at SGX, in a statement on the partnership: “We are pleased to collaborate with Tullett Prebon as we expand our suite of LNG indices beyond Asia. The DKI Sling aims to improve benchmarking and risk management in the Middle East and India region, meeting the specific needs of the physical LNG market as it evolves.”

“We see the development of a trusted and transparent price for the Middle East and India region crucial in helping LNG participants mark-to-market trading exposure. SGX and the methodology behind the Sling indexes are already highly regarded by the industry, so we think this is the ideal partnership for establishing a credible regional price. This can subsequently be used as an underlying index in physical and financial trades,” added Melissa Lindsay, Global Head of LNG at Tullett Prebon.