Hong Kong Exchanges and Clearing on Tuesday confirmed it was pushing ahead with plans to start a metals trading platform in southern China, looking to build its commodity business in the world’s No.2 economy.
Qianhai, a new free trade zone near Hong Kong, is set to host the platform for trading metals before stretching into other commodities, pending regulatory approval.
HKEx bought the London Metal Exchange for $2.2 billion at the peak of the commodities boom back in 2012, and a mainland presence would come after a years-long struggle by the London bourse to break into China.
“We are going to build in Qianhai a platform – it could become an exchange – and there we are going to trade physical commodities, starting with metals first,” HKEx chief executive Charles Li said at an industry conference in Hong Kong.
The construction of the Qianhai platform would include setting up an IT system, which Li hopes to complete by the end of the first quarter of 2017, as well as building warehouses.
“Warehousing is not an easy thing to do. It took LME 150 years to build 700 warehouses globally … Are we going to build them (in China) in five years? That’s too long … Is it possible in one year? We think it’s possible and we’ll give it a try,” Li said.
The Hong Kong bourse is also ready to connect different commodities markets globally, Li said.
“Anytime our Chinese domestic exchange partners want to connect, we are ready for them. .. We can connect physically or financially, or we can connect the benchmarks,” he said.