By Kim Kyoungwha Dec. 2 (Bloomberg) -- The Singapore Mercantile Exchange expects to start commodity derivatives trading in the first quarter after receiving “in-principle” regulatory clearance from the central bank, it said today. The bourse will trade precious metals, base metals, energy, agriculture, currency pairs and commodity indexes using an electronic platform developed by Financial Technologies India Ltd., it said. The exchange has not decided which products it will offer first, it said. The opening of the city state’s second commodity exchange comes as banks such as JPMorgan Chase & Co. and Citigroup Inc. add staff in Asia to benefit from surging metals and energy prices. Chairman Terry Duffy of CME Group Inc., the world’s largest futures exchange, in October predicted “great growth” in Asian derivatives as the region’s economy expands. Customers want to “better manage their risk in the Asian trading hours,” Thomas McMahon, Chief Executive Officer, said in a statement. The bourse “ continues to work on satisfying the Monetary Authority of Singapore on an agreed set of conditions, so it may commence operations in the New Year.” Asia’s influence on commodity markets is growing as hedge funds, insurers and central banks increasingly diversify from developed markets. China’s economy grew at an 8.9 percent annual rate in the third quarter, driving demand for commodities ranging from iron ore to copper and soybeans. Price Boom Commodity prices, measured by the Standard & Poor’s GSCI gauge of 24 futures, climbed 48 percent this year, outperforming a 23 percent gain in the Standard & Poor’s 500 Index. The Singapore Mercantile Exchange, fully owned by Financial Technologies Group, which runs the largest commodity bourse in India, will compete with Singapore Commodity Exchange and other rivals to bolster their presence in Asia. Dalian Commodity Exchange president Liu Xingqiang said on Oct. 12 that China’s largest derivatives bourse aims to “be more than just agricultural or energy-oriented.” CME Group said in September it would buy a 25 percent stake in Bursa Malaysia Bhd.’s derivatives unit and license its palm oil settlement prices to tap hedging demand. To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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