Starsupply to open renewables OTC derivative brokerage in Singapore

European firm looks to capitalise on increasing demand for palm oil hedging

Geneva-based global commodities broker SCB Group, more widely known as Starsupply, aims to open a new office in Singapore in either the second or third quarter 2013, with an initial focus on broking OTC crude palm oil swap contracts.

The firm has been researching the move for three years and aims to use its leading position in OTC agricultural derivatives in order to gain a strong foothold in the region. Since the broking house began broking OTC crude palm oil derivatives in 2009, for example, it has seen market volumes grow from around 20,000 tonnes traded on paper on a monthly basis to over 50,000 tonnes.

"Singapore is a hub for palm oil, rape seed oil and bean oil and we have an edge there as the major renewable energy broker globally, so that's something we can use to get into the region," says Joachim Emanuelsson, chief operating officer of the renewables-focused broking house. "We have been researching several different commodities over the last few years and vegetable oils are a great fit for us. With crude palm oil now being the most traded vegetable oil in the world, it's inevitable that we are going to have a growing presence in Asia."

The Asian renewables markets is not yet large enough to justify the move on its own, according to Emanuelsson. However, the size and continuing development of the region's feedstocks markets for products such as ethanol and bio-diesel that trade globally justify the move and will position the firm for when Asia's renewables markets reach critical mass, he says.

"The renewables landscape in Asia will be enormous but countries have so much of it domestically, they don't really need any international trade at present because domestic demand does not yet outstrip supply. So if anyone is going to open in Asia, you have to match old school commodities with the new world – the new world being feedstocks for renewables markets elsewhere."

The firm plans to start trading in Geneva but is working to the Singapore time zone in order to make the transition smoother, already ensuring that brokers are ready for the afternoon sessions in Asia.

"So we prototype the broking office from here: the time difference is not ideal for the people doing it. But when we open the doors, we know we have a business going," says Emanuelsson.