FMX | Connect – www.fmxconnect.com - (Reported 5/06/2010)
Via Reuters
Standard & Poors has launched its first index of non-U.S. commodities to meet demand from clients who want an international product mix and trading opportunities unhampered by upcoming U.S. market regulations.
The S&P World Commodity Index .SPWCI will consist of 23 commodities such as U.K. Brent crude oil, Malaysian palm oil and Tokyo-traded kerosene, S&P said in a statement on Wednesday.
"It was really developed on requests from clients wanting a more regional exposure to commodities," Mike McGlone, director of commodities indexing for S&P, told Reuters. "But I can't deny that interest picked up as the CFTC issues and regulation issues kicked in."
The CFTC, or Commodity Futures Trading Commission, plans to restrict trading in U.S. commodities to rein in speculators, whom some blame for sending food and oil prices to record highs in 2008.
McGlone said the World Commodity Index will have the same methodology as the S&P GSCI .SPGCI, the world's most-widely accessed commodity index dominated by the West Texas Intermediate contract for U.S. crude oil.
"We decided to use the same methodology because the GSCI is robust. So the new index will be heavy weight in energy and heavy weight in Brent instead of the WTI," McGlone said.
He said a lot of contracts proposed initially for the World Commodity Index did not meet the high standards benchmarked to the S&P's GSCI. "For instance, things like greasy wool just did not have the liquidity to get through."
Prices of contracts on the new index -- quoted in non U.S. currencies such as the euro, yen, sterling, Canadian dollar and the Malaysian ringgit -- will have to be converted to the dollar before the index's values can be ascertained, S&P said.
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