* ICDX hopes to launch tin futures in 2014
* Follows controversial physical tin contract
* Indonesia wants greater influence on tin prices
By Michael Taylor
JAKARTA, Nov 21 (Reuters) - Indonesia's main commodities exchange is planning to build on its physical tin contract by offering tin futures next year that it hopes could help win trade from the London Metal Exchange.
Indonesia in August forced all its tin ingot exporters to trade on the Indonesia Commodity and Derivatives Exchange (ICDX), before shipping the solder material, in a bid to raise prices and curb illegal mining, as well as to gain a greater say over global prices now dominated by the LME.
Since the new regulation was introduced, shipments have plummeted from the world's top exporter of the refined metal, with half the smelters in top tin-producing region Bangka Belitung halting operations and state-owned PT Timah declaring force majeure.
Undeterred by industry criticism, the ICDX business development team is now conducting extensive studies on a tin futures contract, with concrete plans due to be announced by the first quarter of next year with an eye on a 2014 launch, the bourse's chief told Reuters.
"It definitely has to be next year," ICDX Chief Executive Officer Megain Widjaja said of the tin futures plans. "There is a need to create a hedging mechanism built on the tin contract - it is something that we need to take a look at. Hopefully we can announce our strategic move in the first quarter."
Several top tier LME members, including JPMorgan Chase , have started to look at whether to join the Indonesian bourse, sources said last week, in a sign the physical contract was picking up momentum.
ICDX currently has 14 registered tin buyers and 17 tin seller members, Widjaja said.
As of Wednesday, around 700 lots of tin had traded on the exchange, eqivalent to 3500 tonnes, up around 6 percent from the full month of October.
This is still a fraction of the LME tin contract where 185,821 lots traded last month, equivalent to 929,105 tonnes.
"They've got to get the funds and consumers on board ... I don't think that is likely," a London trader said.
Southeast Asia's biggest economy has shown no signs of watering down the trading rule, contrary to some market expectations, as it has done with other regulations such as its tin purity law.
The Indonesian government is focusing on making the new tin contracts work before looking at rolling out similar domestic trading regulations for other commodities, Widjaja added.