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Old November 27th, 2006, 04:35 PM   #1
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Futures Market

HKEx poised to launch yuan futures trading
27 November 2006
South China Morning Post

The board of directors of Hong Kong Exchanges and Clearing has decided to introduce yuan futures trading within six months in a bid to fend off competition from rival exchanges, according to a source at HKEx, which runs both the stock and futures markets.

Yuan futures at HK$1 million per contract will be available against the US and Hong Kong dollars, the source said. All contracts will be settled in Hong Kong dollars.

"We do not expect very active trading because yuan spot trading is confined to a 0.3 per cent daily band," the source said. "It's difficult to have derivative products when spot trading spreads are that narrow. However, HKEx still needs yuan futures in order to be ready for the opening of the Chinese markets and the liberalisation of the currency policy. We have to prepare Hong Kong to be a yuan trading centre for China."

On August 27, the Chicago Mercantile Exchange, the largest futures exchange in the United States, launched the first yuan futures and options contracts against the US dollar, euro and yen.

HKEx decided against launching any kind of options or futures against the euro and yen because they have yet to trade on the Chicago exchange since their debut.

According to the Chicago exchange's website, yuan-US dollar futures have traded 2,193 contracts since their debut, including 932 contracts last month.

"It won't take long for HKEx to catch up," the source said.

The only yuan hedging tool available to investors at present is non-deliverable forward contracts. They are traded over the counter, usually among bankers, and are settled in US dollars.

A Hong Kong banker said the market for HKEx's yuan futures would be more transparent than the over-the-counter market for such contracts. It should attract retail investors, too.

"I expect HKEx's yuan futures will receive a better response than the Chicago Mercantile Exchange's futures just because Hong Kong is closer to the mainland and investors here will have a greater interest in trading yuan derivative products," the banker said.

Future movements of the yuan are a hot topic for investors; many believe the currency has no choice but to appreciate because of China's strong export and economic growth and because of US political pressure for a stronger yuan.

Since its revaluation in July last year the yuan has gained 3.3 per cent. It traded on Friday at 7.8525 to the US dollar. Two weeks ago the yuan had its biggest weekly gain in two months.
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Old November 29th, 2006, 06:52 PM   #2
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Hong Kong mulls climate, commodities futures - report

HONG KONG, Nov 29 (Reuters) - Hong Kong Exchanges and Clearing is considering introducing a climate exchange to trade environment-related derivatives such as carbon emission futures, the South China Morning Post said on Wednesday.

The newspaper quoted chief executive Paul Chow Man-yiu as saying the proposal was part of the exchange's three-year strategic plan, which is due to be announced next week.

The exchange will soon seek tenders for a consultancy firm to study the plan.

It will also hire a consultancy to study the launch of commodities futures such as soybean, cotton and energy.

It planned to start trading in Chinese yuan futures in the next six months, the report said.
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Old December 7th, 2006, 05:07 AM   #3
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HKEx Plans Pre-Market Trading Of H-Share Index Futures
4 December 2006

HONG KONG (Dow Jones)--Hong Kong Exchanges & Clearing Ltd. (0388.HK) said it plans to introduce pre-market trading for H-share index futures contracts early next year, amid a sharp rise in demand for the China-related investments.

HKEx said in a statement dated Monday that from Jan. 8, there will be two 30-minute pre-market opening periods for the H-share index futures contracts, from 0115 GMT to 0145 GMT and from 0600 GMT to 0630 GMT.

This follows the procedures applying to futures contracts for the city's benchmark Hang Seng Index, which also have two 30-minute pre-market opening periods before the morning and afternoon sessions.

HKEx said that in the first eleven months of this year, the volume of H-share index futures rose 1.4 times from the same period of 2005. Trading of the futures hit a record high of 77,773 contracts Nov. 28.

During the pre-market opening period, the calculated opening prices are established before the market opens without matching orders. HKEx said the mechanism serves to "establish an orderly market open and greatly enhances market efficiency."

The H-share index includes major Chinese companies such as PetroChina Co., China's largest listed oil company by assets, and China Construction Bank Corp., China's third-largest lender by assets.
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Old December 7th, 2006, 05:08 AM   #4
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Seeds sown for commodities futures, climate exchange
5 December 2006
South China Morning Post

Could Hong Kong, where fewer than 2 per cent of the population works in agriculture and only a few could quote the non-supermarket price of rice, be fertile ground for commodities trading?

We expect that Paul Chow Man-yiu, the chief executive of Hong Kong Exchanges and Clearing, will deal with that question, among others, when he talks about HKEx's three-year strategic plan at a luncheon hosted by the Hong Kong Securities Institute on Thursday.

There was originally a lot of speculation about what he might announce but the media-friendly Mr Chow has already previewed some of the key points.

The exchange plans to introduce yuan futures within six months. It will also study the possibility of reviving commodities futures and launching a "climate exchange" for the trading of products related to environmental preservation. Of course, it will continue to pursue mainland listing candidates and seek ways to improve corporate governance.

Obviously, HKEx feels it's time to turn some of its attention to developing the derivatives markets. Equities can take care of themselves; the stock market ranks No8 in the world by market capitalisation and monthly turnover last month exceeded HK$1 trillion. When it comes to derivatives and commodities, however, Hong Kong doesn't even make the top 20.

The only derivatives to have taken off here are warrants, although for purposes of calculating turnover, they are treated as equities. Red-chip and property futures introduced in the late 1990s didn't last.

For a while, back in the 1980s, soya beans, cotton, gold and sugar were traded but never thrived.

"The Hong Kong stock market is very active and it is very easy for investors to make money by trading stocks," a stockbroker said. "This has discouraged trading in futures products. In a sense, the exchange is a victim of its own success."
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Old December 14th, 2006, 03:07 AM   #5
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Hong Kong eyes yuan futures in mid-2007

BEIJING, Dec 14 (Reuters) - Hong Kong Exchanges and Clearing Ltd. <0388.HK> hopes to launch yuan futures trading in the middle of 2007, the official China Securities Journal reported on Thursday, citing the exchange's chief executive, Paul Chow Man-yiu.

Chow said the exchange's board of directors had approved the yuan futures trading plan in principle.

The newspaper said futures contracts would be launched against the Hong Kong dollar and the U.S. dollar.

They would be settled in Hong Kong dollars and the value of each contract would be at least HK$1.0 million.

In August, the Chicago Mercantile Exchange (CME) launched yuan futures and options contracts, but trade has been slow.

The Hong Kong Exchange is also considering environment-related derivatives such as carbon emission futures, the South China Morning Post said on Nov. 29.

It would also hire a consultancy to study the launch of commodities futures such as soybean, cotton and energy, the paper said.
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Old January 25th, 2007, 06:09 PM   #6
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Mid-year launch for HKEx yuan futures
Hong Kong Standard
Wednesday, January 24, 2007

Hong Kong Exchanges and Clearing (0388) will launch yuan futures trading in the middle of this year as part of its plan to forge closer relations with mainland financial markets, chairman Ronald Arculli said Tuesday.

In an exclusive interview, Arculli told Sing Tao Daily, sister newspaper to The Standard, that HKEx will circulate a consultation paper on these mainland- related derivative products next month.

He believes there will be huge demand for yuan futures as many foreign companies doing business in the mainland will want to hedge exchange-rate risks with such a tool.

Chicago Mercantile Exchange, however, began trading yuan futures contracts on its electronic platform in August last year. It also trades options.

"I think some of the trading may move to Hong Kong as we share the same time zone with the mainland," Arculli said.

The HKEx chairman expects mainland companies will continue to seek listings domestically or on the Hong Kong market, or both, depending on market sentiment.

He also foresees more Asian companies seeking to tap capital in Hong Kong.

However, he declined to predict whether the size of capital formation in Hong Kong this year would break last year's record HK$333 billion, which included the US$21.2 billion (HK$165.4 billion) initial public offering of Industrial and Commercial Bank of China (1398).

Moreover, Arculli said he expects HKEx's proposal to attract more foreign companies not incorporated in Hong Kong, the mainland, Bermuda and Cayman Islands to list in Hong Kong will be formally announced in the first half this year, after it has won approval from the Securities and Futures Commission and its listing committee.

Unfazed by New York mayor Michael Bloomberg's initiative to attract new listings by simplifying regulations, Arculli believes the Hong Kong market will remain the top priority for mainland companies eager to sell shares outside China.

He pointed out that trading in shares of mainland companies in Hong Kong outstrips the trading of their American Depositary Receipts in New York.

In a roadmap unveiled December, HKEx outlined 16 key initiatives covering trading, clearing and accountability, among other things, to secure the continuing development of Hong Kong's financial markets.
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Old January 29th, 2007, 06:37 PM   #7
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HKEx explores development of gold futures trade
Hong Kong Standard
Monday, January 29, 2007

Hong Kong Exchanges and Clearing (0388) will study the development of gold futures in Hong Kong in its first move to wrest the running of this market from its local gold-trading counterpart.

HKEx chairman Ronald Arculli said in an exclusive interview with Sing Tao Daily, sister newspaper of The Standard, it will hire a consultant to study the market for gold derivatives.

On similar intentions by the Chinese Gold & Silver Exchange Society to offer gold futures trading, Arculli said: "The consultant hired by HKEx will study this problem. If it is not studied, we will take the initiative to seek the views of the consultant firm."

Two weeks ago, a government-appointed focus group recommended that Hong Kong develop a market for yuan and commodities futures and options as part of the SAR's action agenda on China's 11th Five-Year Plan.

Arculli said HKEx is studying commodities futures and, if another exchange developed similar products, then it would be necessary to clarify each other's role and means of cooperation. Overseas exchanges are also competitors and not just the Chinese Gold & Silver Exchange Society, Arculli said. The consultant would also study that area.

Last month, HKEx confirmed talks with the Shanghai Futures Exchange on allowing HKEx to trade in mainland gold futures by the middle of the year.
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Old April 28th, 2007, 06:14 AM   #8
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CME fights HKEx for futures business
Chicago exchange to launch contracts on H shares, red chips

15 March 2007
South China Morning Post

Competition between Hong Kong Exchanges and Clearing and the Chicago Mercantile Exchange has increased with the American exchange announcing it will launch FTSE/Xinhua China 25 futures contracts in May.

The Hong Kong exchange introduced similar products in May 2005. The CME and HKEx contracts are based on the FTSE/Xinhua China 25 Index, which tracks the 25 largest liquid H shares and red chips in Hong Kong, such as China Mobile and PetroChina.

The US contracts will be denominated in US dollars while the Hong Kong contracts are traded in the local currency.

The CME index contracts will be launched just a month before HKEx introduces yuan futures contracts against the US dollar. The Chicago exchange launched the product in August last year.

"There is competition [between] the exchanges but I think competition is a good thing," said Tina Lemieux, the managing director of products and services at the CME. "It forces the exchanges to work sharper and better meet customer demand."

Ms Lemieux said trading the CME contracts in US dollars would make it easier for US hedge funds and international investors to conduct hedging.

HKEx contracts traded only within Asian business hours - from 9.45am to 4.15 pm excluding lunch - while the CME product would be traded around the clock, she said.

Local brokers said that HKEx would be in a strong position to compete with the CME on the contracts.

"The underlying stocks in the FTSE/Xinhua China 25 are listed in the Hong Kong market. It is natural to do the hedging with the derivative products in Hong Kong," said Tony Espina, chairman of the Hong Kong Stockbrokers Association.

An HKEx spokesman said it was normal for exchanges around the world to compete against each other. "I am confident that the HKEx is ready to compete with its overseas counterparts."

Only 8,154 FTSE/Xinhua China 25 futures contracts were traded in Hong Kong last year compared with 4.88 million H-share futures contracts. The most popular Hang Seng Index futures had 12.71 million contracts traded.

The Chicago exchange's website says only 5,407 yuan-US dollar futures were traded last year after the contracts were launched in August.
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Old April 28th, 2007, 06:16 AM   #9
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Farm futures offer pick of crop
25 March 2007
South China Morning Post

Schroders is offering Hong Kong retail investors their first chance to invest in a managed agricultural commodity futures fund, which the firm predicts will offer big returns based on growing global demand and limited room for production capacity growth.

"In agricultural commodities, it's only been in the last six months or so that prices have really started to rise. Prices are still close to the bottom, and we think they have a long way to move," said Christopher Wyke, director of emerging market debt and commodities at Schroders.

The firm last week began marketing the Agriculture Fund, which was launched in Europe four months ago, and has raised US$300 million there so far. At the same time it is also marketing a Commodity Fund, which debuted in Europe about 15 months ago and has raised US$230 million to date. For both, it hopes to raise US$50 million in Hong Kong.

Commodities futures for many years were an obscure asset class with few retail participants. However, a sharp change in the supply/demand balance in recent years along with underperformance in larger equity markets has made markets such as soya beans and nickel available to investors through the usual retail distribution networks.

Global stockpiles of crucial metals and food supplies have slipped to multi-year lows. Booming demand from China is a key factor in the tightening supply/demand balance. The country's growing middle class is eating more and better, meaning they are consuming more meat, and thus creating a need for additional grain to raise livestock.

On the metals and energy side, China's economic growth and busy factories are gobbling up oil, coal and metals such as copper and nickel.

Meanwhile, production of such materials is hamstrung by a lack of investment and a shortage of new untapped supplies.

Although the funds will invest mostly in commodity futures, they can invest up to 25 per cent of the money in equities in order to get exposure to commodities that do not trade in accessible, liquid markets. The funds will not take short positions or use leverage.
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