HKEx to launch its first Asia mini-contracts in December

Hong Kong Exchanges and Clearing Ltd (HKEx) will launch its first Asia commodities contracts from Dec 1.

The introduction of the three metals contracts - for aluminum, zinc and copper - is expected to boost Hong Kong's position in the commodities market and lift the mainland's bargaining power in the global commodities market.

The contracts, all of which will be traded in yuan, include London aluminum mini futures, London zinc mini futures and London copper mini futures.

"It's a significant development. It can be the first step for Hong Kong to establish a unique commodities market combining yuan and metals exchanges," said Raymond Yeung, greater China senior economist for Australia and New Zealand Banking Group Ltd. He said that, given the SAR's position in the financial world, the new contracts will help to raise the mainland's bargaining power in the international commodities market.

"This is another big step in our commodities strategy following our launch of self-clearing at the London Metal Exchange (LME) last month and our announcement last month of new LME fees, starting from Jan 1 next year, to support our ongoing investments in the LME," said HKEx Chief Executive Charles Li. Li said the launch marks HKEx's long-awaited first step in developing commodities trading.

"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," he said.

The new mini-metals contracts are all monthly cash-settled futures contracts, with trading hours from 9 am to 4:15 pm and from 5 pm to 1 am the next day. Romnesh Lamba, HKEx's co-head of global markets, said the new contracts are part of its fixed income, currency and commodities strategy in Asia and will expand its Hong Kong markets into new asset classes.

HKEx said on Wednesday it would postpone the introduction of its US dollar-traded API 8 thermal coal futures so it could focus on the launch of the mini-metals contracts. As part of a series of indexes used for international physical and derivatives coal business, the API 8 tracks the price of coal delivered to southern China.

linjingcd@chinadaily.com.cn

(HK Edition 10/23/2014 page8)