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HKEx, LME Continue Expansion Of Renminbi Offerings

by Mary Swire, Lowtax.net, Hong Kong
27 October, 2014

Hong Kong Exchanges and Clearing Limited (HKEx), and its group company the London Metal Exchange (LME), have signed a memorandum of understanding (MoU) with the China Merchants Group Limited (CMG), for a strategic alliance in product development and related services for commodity and financial market users.

CMG, state owned and with headquarters in Hong Kong, is involved in transportation and related infrastructure, including ports, and also in financial investment and management. It is the oldest Mainland Chinese company operating in the city.

"This MoU is an important step for the HKEx Group and CMG companies as we look to develop new products and services to complement our existing businesses," said HKEx Co-Head of Global Markets Romnesh Lamba. "The MoU also demonstrates our continued commitment to expanding the LME's business and user base in Asia."

"This agreement with CMG and China Merchants Securities (CMS) marks the beginning of our collaboration in exploring initiatives, such as LME warehousing in Asia and the development of new renminbi-denominated products," noted Matthew Chamberlain, the LME's Head of Business Development.

"The MoU entered into today marks a critical new milestone for our overall cooperation in the future with particular focus on examining the feasibility of establishing LME-listed warehouses," confirmed Yu Liming, Executive Vice President of CMG.

CMS Chairman Gong Shaolin added that his company would also "explore the provision of cross-border commodity derivatives products, as well as other initiatives, in order to support globalization of the renminbi (RMB)."

In a further move, HKEx disclosed that it will introduce its first Asia Commodities contracts – London Aluminium Mini Futures, London Zinc Mini Futures and London Copper Mini Futures – for trading in RMB on December 1, 2014, subject to market readiness.

"This is another big step in our commodities strategy following our launch of self-clearing at the LME last month and our announcement last month of new LME fees, starting January 1, 2015, to support our ongoing investment in the LME," said HKEx Chief Executive Charles Li. "The new contracts will provide currency convenience, they will expand our range of RMB products, and they will further strengthen Hong Kong's position as the leading offshore RMB center."

"These new contracts are part of our fixed income, currency and commodities strategy in Asia and our efforts to expand our Hong Kong markets into new asset classes," Lamba concluded.


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