LONDON, June 24 Hong Kong Exchanges and Clearing
(HKEx) moved a step closer to offering renminbi
clearing of metals contracts on Monday, signing an agreement
with the London Metal Exchange (LME) and Bank of China
on how it will work.
The move gives Chinese investors improved access to the LME,
the world's No. 1 metals marketplace, by allowing them to use
local currency when trading LME contracts.
The agreement also covers how HKEx might develop
renminbi-denominated commodity products to accommodate Chinese
customers, the world's top consumers and importers of base
LME contracts are denominated in dollars, though the
exchange has for years been offering clearing in currencies such
as sterling and the euro, to accommodate European investors.
The move toward renminbi clearing was on the cards even
before HKEx bought the LME late last year for $2.2 billion.
Although LME contracts are currently cleared through
LCH.Clearnet, Europe's No. 1 independent clearing house, the
exchange plans to offer in-house clearing through LME Clear by
September next year.
"The MOU (memorandum of understanding) entered into today
marks the beginning of our collaboration to examine the
feasibility of LME contracts to be cleared in RMB and potential
development of RMB-denominated commodity products in the HKEx
group platforms," said HKEx chief executive Charles Li.
A clearing house acts as an intermediary between parties to
a trade, in order to reduce the risk of one or more them