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The Future of Futures Lies in Gold Perpetuals

By Asia Pacific Exchange

Published on September 10, 2021

From its use in ornamental art and jewellery, the value of gold has grown in prominence over the years, evolving to become an effective and viable hedging tool against market shocks and inflation, and establishing itself as a store of value. Outside of traditional securities, gold offers endless trading possibilities and opportunities.

Asia Pacific Exchange (APEX) acknowledges the importance of precious metals, especially gold, in the economy. Gold is regarded as a safe haven and a source of security during times of uncertainty. Even during some of the biggest market crashes, its value has outperformed other asset classes such as stocks and bonds. Furthermore, Singapore has successfully established itself as one of the world’s leading financial and commodity trading hubs. These reaffirm APEX’s belief in the significance of creating an investment tool for this precious metal.

APEX: Beginning of an Era

Launched in May 2018, APEX is the third derivatives exchange and clearing house in Singapore. Amid heightened geopolitical tensions and the ongoing Covid-19 pandemic, APEX has been looking to diversify its products portfolio.

To offer trading opportunities to clients in the Asia Pacific region, APEX launched the APEX Gold Perpetual futures contract on 6 August 2021.

The value and utility of perpetual futures are often underrated, with majority of derivatives activity still dominated by traditional derivatives contracts. However, APEX foresees great potential in perpetual contracts and recognizes its rising trend. Perpetual futures is a relatively novel financial instrument. Unlike traditional futures contracts, perpetual contracts have no expiration date, allowing the position to be held indefinitely. APEX’s goal is to provide its clients with products that will facilitate broader participation and adoption of futures.

Unique Features

The APEX Gold Perpetual Futures Contract is denominated in US dollars. The mini contract size of 100 g per contract allows small to medium size participants to utilise the contract effectively in accordance with their needs. Settled daily with London Bullion Market Association (LBMA) Gold AM prices, the contract is traded for 19.5 hours on all LBMA trading days, encompassing the business hours of major trading hubs globally.

Some may be curious about the purpose of the perpetual futures contract when there is presence of traditional monthly or quarterly futures contracts on other exchanges. The APEX Gold Perpetual Futures Contract offers the following key benefits:

  • Rollover convenience: As perpetual contracts do not expire, there is no requirement to rollover positions to the next calendar contract as positions will remain open indefinitely. This is designed to cater to the specific needs of participants who require mid-term to long-term exposure.
  • Low margin rates: Participants can benefit from the low margin rates of US$200/contract at APEX, offering a leverage of more than 28 times.1
  • Low trading cost: Unlike traditional monthly futures, perpetual futures are often traded at a price closely aligned to spot markets. APEX Gold Perpetual Futures are tradable at a low exchange fee of US$0.20/contract, allowing spot participants to participate effectively.
  • Reliable pricing benchmark: The contract is settled daily at LBMA Gold AM prices, ensuring that the contract is fairly marked-to-market.

Diverse Use of Contract

The APEX Gold Perpetual Futures Contract is able to satisfy the diverse needs of different participants. Some examples include:

  • Hedging against physical gold: The small contract size and perpetual feature allow participants to take up precise positions in the contract to customize their hedges against potential adverse price movements without delivery obligations.
  • Riding on short-term momentum: Market participants may take up positions in the contract to benefit from potential short-term movements of the gold price.
  • Long-term view: Market participants may take up long-term positions in the contract, without the need to rollover their positions periodically like the traditional monthly or quarterly gold futures contracts.
  • Portfolio diversification: As gold is an important precious metal used by many portfolio managers to diversify their portfolios, the APEX Gold Perpetual Futures Contract provides a cost-efficient tool for diversification.

Promising Future

APEX will work on growing its influence in the derivatives and precious metals market in the following ways:

  • Inventive approach: APEX seeks to widen its product offering, through developing a range of innovative contracts in various asset classes, including plans to launch a Silver Perpetual Futures Contract with similar characteristics to the APEX Gold Perpetual Futures Contract.
  • Establishment of investor base: APEX is committed to ensuring diversity and depth of its investor base, thus ensuring a high level of market liquidity and depth.
  • Enhancement of technical capabilities: APEX is constantly improving its technical capabilities and embracing new technologies to enhance user experience. Notably, its latest upgrade includes a new clearing system, which is on track to go live in Q4 2021.

Notes

1

Gold price at US$57.9/g as of 16 Sep 2021.

APEX AT A GLANCE

In 2018, Asia Pacific Exchange (APEX) obtained Approved Exchange and Approved Clearing House licenses from the Monetary Authority of Singapore (MAS). With that, APEX aims to establish a leading commodity and financial derivatives trading center in Asia, providing Asian pricing benchmarks for commodities and a new Asian financial derivatives risk management platform.

APEX CEO Eugene Zhu (Left) and Mrs Lim Hwee Hua (Right)

APEX is helmed by founder and CEO Eugene Zhu, one of the pioneers of the Chinese futures industry. Mr Zhu has played pivotal roles during the industry’s development. He served as the CEO of Dalian Commodity Exchange (DCE) from 1996 to 2006, CEO of China Financial Futures Exchange (CFFEX) from 2006 to 2012 and was last the vice chairman and president of Shanghai Pudong Development Bank, one of the largest banks in Shanghai.

APEX Chairman Lim Hwee Hua is a former Singapore minister who has served in a number of ministries, including the Ministry of Finance from 1996 to 2011. She has also led several companies in the private sector, including as managing director of corporate stewardship, and subsequently of strategic relations at Temasek Holdings and head of research and director of business development at Jardine Fleming.

For more information on APEX and the APEX Gold Perpetual Futures Contract, visit: https://www.asiapacificex.com/?p=gold_futures

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Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

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Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

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Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
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Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

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Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

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Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

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Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

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Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

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Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
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Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

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Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

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Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

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Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

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Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

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Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

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Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

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Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

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Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
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