1. Hong Kong bourse says mainland commodity platform to eventually offer futures trading

Hong Kong bourse says mainland commodity platform to eventually offer futures trading

The head of Hong Kong Exchanges and Clearing (HKEx) said the bourse's upcoming commodity platform in mainland China would eventually offer trading in futures contracts. The platform, which will initially be used for spot trading in metals such as copper and nickel.

By: | Updated: May 11, 2017 11:26 AM
Our strategy is to (first) develop the physical market. Without laying a solid foundation in the physical market, you cannot build a good futures market. (Reuters)

The head of Hong Kong Exchanges and Clearing (HKEx) said the bourse’s upcoming commodity platform in mainland China would eventually offer trading in futures contracts. The platform, which will initially be used for spot trading in metals such as copper and nickel, is the HKEx’s latest attempt to take on China’s home-grown exchanges in Shanghai, Dalian and Shenzhen. It remains unclear when it will begin operating. “Our strategy is to (first) develop the physical market. Without laying a solid foundation in the physical market, you cannot build a good futures market,” HKEx Chief Executive Officer Charles Li said on Thursday.

He made the comment on a visit to the site of the upcoming platform in Qianhai, just 50 km (30 miles) from Hong Kong, where HKEx hopes to replicate the success of the London Metal Exchange after buying that bourse around five years ago. The trip to Qianhai was part of the LMEWeek Asia conference. The aim is to connect the Qianhai platform with the LME, luring customers with opportunities to be active in both the mainland’s domestic markets and international markets.

Some industry insiders have said they are sceptical the new exchange will offer anything they don’t already have in a market where investors are turning away from commodities in favour of more tailored investment products. The head of the new platform, the Qianhai Mercantile Exchange, said it planned to develop a warehousing and logistics network.

“Warehousing capabilities are an important indicator for a good physical market, so we need to have a large network with a lot of warehouses available for the consumers,” said Xiaoli Guo.

(Reporting by Melanie Burton; Writing by Joseph Radford; Editing by Tom Hogue)

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