Singapore Exchange , which recently launched clearing services for over-the-counter (OTC) container freight derivatives, is optimistic that the nascent market will grow over time, a senior SGX official said.

Last week SGX became the second clearing house after LCH.CLearnet to offer clearing for the container freight swap agreement (CFSA) market.

"SGX is optimistic that the market will grow over time," Kenneth Ng, vice president, commodities at SGX, told Reuters in emailed comments.

"As Singapore is one of the busiest container ports in the world, it's also natural that SGX try to offer services in the shipping space," he said.

Freight derivatives allow a buyer to take a position on where freight rates will stand at a point in the future. Container contracts offer the same hedging principle as those traded for dry bulk and tanker markets.

SGX, Asia's second-largest bourse by market capitalisation, cleared its first trade last week between Morgan Stanley and Credit Suisse, in a deal brokered by Clarkson Securities.

CFSAs are settled against the Shanghai Containerised Freight Index (SCFI), which is compiled by data provider the Shanghai Shipping Exchange.

Ng said SGX had been in contact with container market participants and the index provider for more than a year.

"With the revamp of the SCFI, which makes the index more suitable for the development of a container derivatives market, we think the time is now ripe for us to develop and start a container swaps cleared market," he said.

The global economic downturn has hit the container sector hard, especially on key routes from Asia to consumers in the West carrying finished goods from electronics to toys. But trade volumes have been picking up in recent months.

Ng said SGX's target markets span from Asia to Europe and the United States.

"Many of the end users of container freight such as large manufacturers, shipping lines and commodity traders are based in Asia," he said.

Clarksons' future broking arm launched the first CFSA in January. FIS also in recent weeks began to offer broking services for CFSAs.

LCH.Clearnet became the first to clear CFSAs in June.

"We believe each clearing house will have their roles to service their customer base in their respective time zone," Ng said.

SGX posted a 13 percent fall in fourth-quarter net profit last week but said heavy investment in IT and the launch of new investment products and trading platforms would translate into higher revenues in the coming years. (Reuters)