Hong Kong Mercantile Exchange Receives Trading Authorisation From Securities and Futures Commission
The Hong Kong Mercantile Exchange (“HKMEx”) announced April 27 that it has received authorisation from the Securities and Futures Commission to operate as an automated trading services (“ATS”) provider. Approval has also been given for its trading debut on May 18, 2011.
The ATS authorisation grants HKMEx the right to offer market participants, through its member firms, the use of its state-of-the-art electronic platform to trade commodities. The Exchange will begin trading with at least 16 members including some of the world’s largest financial institutions and trading firms as well as several well-established brokerages in Hong Kong.
“We are very excited about this historic day. It allows us to establish a liquid and vibrant international commodities exchange based in Hong Kong, linking China with the rest of Asia and the world,” said Barry Cheung, chairman of HKMEx. “Global demand for core commodities has in recent years been driven by Asia, especially China and India. However, market participants in the region have had to rely on Western exchanges for price discovery, bearing the basis risk exposure in the process. Our new platform will offer Asia a bigger say in setting global commodity prices. It will also enable market participants to more actively manage their risk exposures, using products tailored to Asian market needs.”
HKMEx’s broking members at launch include BOCI Securities Ltd, Celestial Commodities Ltd, CES Capital International Co. Ltd, Chief Commodities Ltd, ICBC International Futures Ltd, Interactive Brokers LLC, KGI Futures (Hong Kong) Ltd, MF Global Hong Kong Ltd, Morgan Stanley Hong Kong Securities Ltd, OSK Futures Hong Kong Ltd, Phillip Commodities (HK) Ltd, Tanrich Futures Ltd and TG Securities Ltd. Its three clearing members are Interactive Brokers (UK) Ltd, MF Global UK Ltd and Morgan Stanley & Co International Plc.
The first product to trade on the Exchange will be a 1-kilo gold futures contract offered in US dollars with physical delivery in Hong Kong. Trading hours will run between 0800 to 2300 Hong Kong Time, overlapping commodity markets in Europe and the US. “This helps to promote cross-continent trading and boost liquidity,” said Albert Helmig, president of HKMEx. “It also offers participants extensive opportunities for hedging, arbitrage and effective risk management.”
In the pipeline are standardised products which will either be physically or financially settled, covering precious and base metals, energy, agriculture and commodity indices.
HKMEx is uniquely positioned to take advantage of the liberalisation of the renminbi in Hong Kong. “China’s pilot scheme for the settlement of overseas direct investments in the Chinese currency has not only increased cross-border trade settlement and liquidity, but also created a strong demand for renminbi-denominated investment instruments,” said Mr. Helmig.
All transactions on HKMEx will be cleared through London-based LCH.Clearnet – a leading independent clearing house serving major international exchanges.
HKMEx has attracted shareholders from around the globe including China’s ICBC and COSCO Group as well as Russia’s En+ Group, among others.
“We are very fortunate to have such a strong shareholder base in addition to a board of directors who are of the highest calibre in their own fields. Our management experience, together with cutting-edge technology, market focused products, and Hong Kong’s strategic location and infrastructure will ensure HKMEx a promising future,” said Mr. Cheung.