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CME to launch offshore RMB futures

By Wei Tian and Oswald Chen (China Daily)

13:25, September 14, 2012

Chicago-based CME Group Inc announced on Thursday that it is expanding its overall suite of yuan products by including deliverable offshore renminbi futures, answering increased demand for the currency in overseas markets.

The deliverable CNH futures will be launched and listed in Chicago in the fourth quarter of this year and in Europe in the second quarter of 2013, said the largest exchange operator in the United States.

CME's products come into play as the Hong Kong Exchanges & Clearing Ltd is scheduled next week to launch the first exchange-traded USD/CNH currency futures settled in yuan.

The announcement came as CME sees the market being "ready" for offshore renminbi futures, with regard to increasing liquidity outside China, said Julien Noble, head of CME Asia-Pacific.

He said one of the "significant developments we have witnessed is renminbi accumulation" outside the Chinese mainland, as well as broader usage in cross-border trade settlement.

Noble said he has seen growing renminbi deposits over the past 18 to 24 months, particularly in Hong Kong, which reached 600 billion yuan ($94.8 billion) by the end of 2011.

In addition, there is also an increasing daily turnover of CNH, which is between 3 and 4 billion yuan.

The trading volume in Asian markets currently accounts for 3 to 5 percent of the current overall level for CME, out of its 22 to 23 percent of transactions outside the US, and Noble said this still has great prospects for growth.

He added that the futures contract would cater to the increasing needs of companies and investors to hedge against currency risks, as the one-way appreciation trend of the yuan appears to have come to an end.

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