Published On: Mon, Aug 30th, 2010

HKEx Considers Launching Yuan Futures Market

The Hong Kong Exchanges and Clearing (HKEx) is considering launching a yuan currency futures market, another small step towards internationalising the Chinese currency, the China Business News said in a report on Friday August 27.

HKEx has not fixed a plan for yuan futures products yet but the size of each contract will be 1 million yuan ($147,100), the newspaper cited a spokesman from the exchange as saying.

HKEx chief executive Charles Li said earlier there was a need for investment tools using the yuan CNY=CFXS to broaden the acceptance of the currency by international trade partners amid efforts to internationalise the currency, the newspaper said.

Li added that a yuan-denominated product could be traded on the HKEx as early as the end of the year or early next year.

The HKEx will further study the development of the product if most banks show strong interest, but the initial volume may not be very big, the newspaper said.

Until a few months ago, Hong Kong banks could only deposit yuan funds at the designated clearing bank.

In recent months, China opened alternatives for the use of yuan outside it borders as it develops Hong Kong as an offshore market to trade the currency.

The move has prompted some deliverable forwards deals in the territory, already marking the potential emergence of a market that could eventually draw business from the mainland and offshore.

Last month, CITIC Bank International (0998.HK) and Industrial and Commercial Bank of China (Asia) (1398.HK) completed Hong Kong’s first foreign exchange swap for yuan.

Source: Reuters

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