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CME Group to launch offshore yuan currency futures in Q4
September 13, 2012 / 8:40 AM / 5 years ago

CME Group to launch offshore yuan currency futures in Q4

HONG KONG, Sept 13 (Reuters) - CME Group Inc, the
biggest U.S. futures market operator,  said on Thursday it plans
to expand its offering of yuan products to include deliverable
offshore yuan futures, a m ove which should further help
internationalise China's currency.
    The U.S. dollar/offshore yuan (CNH) futures will be
available in contract sizes of $10,000 and $100,000, which will
allow for more flexible hedging and is likely to appeal to
retail traders.
    CME Group plans to have the futures dual-listed on the CME
and CME Europe Ltd in the fourth quarter of this year and second
quarter of 2013, respectively.
    "The renminbi is going to be an international currency and
we are facilitating and helping that happen," K.C. Lam, director
of FX products at CME Group, told Reuters in a telephone
interview, adding it is targeting asset managers, funds and
commercial customers. 
    "Even financial institutions outside of Asia, where they do
not have access to CNH but want to have exposure or have risk
management needs, they might want to have this product."
    The Hong Kong stock exchange said last month it would launch
the first USD/CNH futures on Sept. 17, aiming to
capitalise on the product's transparent pricing and lower
counterparty risks to attract investors to the nascent offshore
yuan market.
    Before the launch of the standardised futures contracts,
market players have been making use of the offshore yuan
deliverable forward (DF) and non-deliverable forward (NDF)
market to hedge their yuan exposure or speculate on yuan
    Lam said CME's CNH futures contracts will extend to as long
as three years compared to the one-year tenor offered by the
Hong Kong exchange, partly to meet the offshore yuan bond
investors' needs since typical dim sum bond tenors are around
2-3 years.
    CME now has a yuan product offering that includes
cash-settled yuan futures and clearing for OTC NDFs in USD/CNY.
The September USD/CNY futures contract closed at
0.157850 on Wednesday, implying the yuan would reach
    The company offers 56 futures and 31 options contracts,
reflecting an average daily notional value of $110 billion in
2012. It also provides OTC clearing services for 12 OTC NDF
currency pairs and 26 cash settled forwards. 
    China has been promoting the international use of the yuan
 in trade for the past two years to reduce the
country's reliance on dollar financing. A thriving market in
yuan-denominated bonds and deposits has sprung up in Hong Kong
as a result and banks and exchanges from Singapore to London are
eager for a piece of the action. 
   China is planning to make the yuan basically convertible as
early as 2015 and, further down the road, turn it into a global
currency on par with the U.S. dollar.

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