However, the world is now increasingly looking towards Asia for growth in commodity trading and expansion of markets thanks to the presence of two majors in BRICs (Brazil, Russia, India, China South Africa) in the region.

 

China on the strength of its strong economic growth in recent years and consumption of metals-energy commodities already has some of the world's largest futures exchanges in Dalian and Shanghai Futures Exchange (SHFE).

 

SHFE had recently announced its intention to start crude oil futures to enable it as an Asian benchmark.

 

Singapore is aspiring to develop itself as the prime Asian hub for LNG trading capitalising on its intense demand for the commodity.

 

The city-state, which is already a successful oil trading hub in the continent, is advantaged by its strategic geographical positioning between producers such as Indonesia, Malaysia and Australia, and consumers such as China, India and Thailand. The International Energy Agency mentioned that Singapore, a country that produces over 90% of its electricity from LNG, is the most suitable Asian nation to assume the position of a LNG trading hub in the region. It also stated that Asia has overtaken Europe as the globe’s greatest importer of LNG, accounting for 46% of the international trade.

 

The demand for LNG is not exclusive to just Asia. There is rising demand for LNG beyond Asia, and Singapore is vying to tap on that growing demand too. Last year, the island nation purchased three gas blocks near Tanzania for US$1.3 billion (TODAY, 5/24/14), and imported its first LNG cargo to kickstart its $1.34 billion, first-ever LNG terminal in Jurong Island.

According to the Second Minister for Trade and Industry, S.Iswaran, Singapore hopes to attract more LNG companies to incorporate in Singapore and contribute to the growth of the local LNG industry. The country, which is already home to over 20 LNG companies, welcomes the local incorporation of LNG businesses in a variety of areas such as marketing, procurement and trading. Thus, in the last few year various businesses have established LNG trading desks in Singapore to capitalise on its expanding infrastructure, such as GDF Suez, BP and Statoil.

 

Meanwhile, Japan's Osaka Exchange has stated its ambitious expansion plan that includes foray into precious metals, rubber, oil, liquefied natural gas products, forex futures and options.

 

Japan Exchange would be joining Hong Kong Exchanges & Clearing Ltd. and Singapore Exchange Ltd. in expanding into commodities in Asia, where most of the world’s copper, gold and energy is consumed, Bloomberg reported.

 

India, a major producer, importer and exporter of agri commodities and a major importer of energy products, already has six national level commodity exchanges. In the years prior to 2013, the market witnessed a healthy growth of 55% and above annually but the imposition of Commodity Transaction Tax (CTT) and a Rs 5600 cr scam in National Spot Exchange (NSEL) had caused sharp drop in volumes last year. However, it has been accepted that futures trading is a useful price discovery mechanism while hedging activities hasn't been a success. However, there are moves to integrate the equity and commodity markets regulator under one umbrella for better oversight and regulation of the markets.

 

In the Asian region, China and India are already major consumers of iron ore and coal critical for the development of steel and power utililities.