 "New owner effects quick revamp of Jignesh Shah's Singapore venture")
Not only were the existing contracts in SMX wound down quickly, its acquirer, the US-based Intercontinental Exchange (ICE) group, also moved in for a complete makeover, working closely with the regulator, Monetary Authority of Singapore (MAS).
Less than three months after it completed the acquisition, ICE has already made a series of changes. In fact, when the exchange resumes operations later this year as ICE Futures Singapore, it is unlikely to have any similarities to SMX in name, people, technology or products. “...the former SMX market was closed in consultation with market participants, clearing members and the regulator. During the transition phase, the previous SMX membership is suspended while we put into place a new framework,” ICE’s London-based spokesperson Claire Miller said in response to queries from Business Standard. The exchange is in the process of being moved to a platform used by ICE globally.
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SMX was launched in 2010 and had annual turnover of $100 billion by 2012, in varied products such as e-gold, euro-dollar currency derivatives, iron ore index and black pepper. It was headed by V Hariharan as chief executive, while some Singaporean experts were directors. As in many of his Indian ventures, Shah was vice-chairman; the chairman was a prominent former SGX president, Ang Swee Tian.
Following the crisis in National Spot Exchange (NSEL) last August, volumes began to plummet. Under the close watch of MAS, a deal was struck with ICE in November to sell the bourse for $150 million. The acquisition included Singapore Mercantile Exchange Clearing Corporation Pte Ltd (SMXCC), a wholly owned subsidiary of SMX, and clearing house for all SMX trades.
Within weeks of ICE completing the acquisition on February 3, trading on the bourse was shut down. “There was minimal Open Interest (unsquared positions) when the close date was announced and holders of the small amount of OI remaining were offered trade outs up to a week after the date. As it happened, there was no OI left when we closed the exchange,” Miller said.
Last month, ICE also announced that the Singapore Mercantile Exchange and Singapore Mercantile Exchange Clearing Corporation were to be renamed ICE Futures Singapore (IFS) and ICE Clear Singapore (ICS).
It also announced the new top management, with Lucas Schmeddes as president and chief operating officer. Schmeddes was previously COO of ICE Endex in Netherlands. Jennifer Ilkiw will be Vice-President, ICE, for the Asia-Pacific region.
Some local directors such as former chairman Ang and Vijay Iyengar will continue, alongside ICE representatives such as Jeffrey C Sprecher, chairman and CEO, and David S Goone, chief strategy officer.
The new owners have taken the regulator and market participants into confidence before the moves. When asked what changes warranted such an outright closure of a functioning exchange, which Indian authorities have made heavy weather of, Miller said,
“Exchange and clearing members will benefit from the ICE platform’s industry-leading performance, functionality and reliability...”
She added the new platform would have sophisticated options and trading functionalities. ICE did not directly respond on whether the old contracts would be relaunched but indicated there could be ‘new’ ones.
“We have not made any announcements in relation to new product development. However, new opportunities include the potential for a variety of new cleared contracts to serve the Asian commodity and financial derivatives markets to meet G20 requirements that an increasing proportion of OTC business be cleared,” the ICE spokesperson said.
We expect to relaunch the exchange and clearing house later this year, she added.