Hong Kong exchange targets Q4 launch for new metals, coal contracts

SYDNEY Thu May 22, 2014 7:39am EDT

SYDNEY May 22 (Reuters) - Hong Kong Exchanges and Clearing Ltd is targeting a fourth quarter launch for its mini metals and coal futures contracts, pending regulatory approval, an executive said on Thursday.

The Hong Kong bourse plans to introduce mini copper, aluminium and zinc contracts based on settlement prices of the futures on the London Metal Exchange (LME), which it owns, as well as a thermal coal contract, it said last month.

"We are working hard to make this happen soon, targeting sometime in Q4, subject of course to regulatory sign-off," said William Chin, senior vice president of Asia commodities at HKEx, speaking in the Reuters Global Base Metals Forum.

The Chinese currency-denominated metals contracts are to be settled in cash and will trade in 5-tonne lots, rather than the 25 tonnes on LME futures. The thermal coal contract will be U.S.-dollar denominated.

The Singapore Exchange launched similar contracts but based in dollars in 2011, but said in January it would wind down the contracts after they failed to gain traction with market participants.

Chin said the new contracts would leverage off HKEx's platform as a key offshore trading centre for China's renminbi currency, also known as the yuan, at a time when there is increasing demand for renminbi commodity products, backed by the membership base of HKEx and the LME.

Separately, Chin said the exchange had defined a full contract specification for its regional aluminium premium contract and that it was working towards making a formal announcement as soon as possible.

In April, LME Chief Executive Garry Jones said the exchange may not launch its new aluminium premium contract until early next year. (Reporting by Melanie Burton; Editing by Susan Fenton)