Is China entering margin FX?

Doors to the worlds next big economy seem to be openign up for FX brokers. The Chinese authorities have tried

Doors to the worlds next big economy seem to be openign up for FX brokers. The Chinese authorities have tried to stamp out FX trading for locals in foreign markets however international brokers have been trying their utmost to establish some sort of position in China. With an estimated 30% of Chinese internet users online trading firms are hungry to source the Chinese traders.

Currently the Yuan a NDF has limited onshore trading, new centres like Hong Kong are embracing the offshore Yuan market.

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Gain Capital a leading listed FX broker was given the red card by local authorities for promoting FX products however the firm got approval to offer educational service in mainland China.

IKON FX a leading FX and Futures broker who has a large presence in China; has announced that they have set up a venture with the authorities on setting up China’s first FX ECN in the City of Tianjin.

Financial Electronic Communication Network Exchange (“IKON Tianjin Financial ECN”), will enable Banks, Financial Institutions and individuals to trade on the International Forex Market in accordance with Chinese Governing Law. The value of the said project is estimated to be in excess of US$3.2 Billion.

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The Chinese Central Government has appointed the City of Tianjin to become the next Financial Centre in China. Thus in conformity with such directions from the Chinese Central Government, IKON Group and the Tianjin Government have co-operated to establish this groundbreaking project to be located in the City of Tianjin.

Mr. Naser Taher, the CEO of IKON Group said, “IKON Group, is proud of its unique partnership with the Chinese Government, to establish the IKON Tianjin Financial ECN, which will not only bring the International Forex Market to China utilizing groundbreaking technologies in the online Financial Derivatives Systems, and through this historical agreement signed today, it will inevitably place China, on an equal footing against its counterparts in the west.”

IKON has moved up the ranks with a few surprises, it received a hefty fine in 2009 and 2010 and was also identified by Forexmagnates’ as a content ‘borrower’!

China had investigated Alpari UK a leading FX broker for their operations in China.

China’s business community is heavily dependant on foreign exchange, with market volatility reaching new peaks traders are looking at ways to mange risk and their un-hedged position. Yuan FX options were introduced, CME had set up new Yuan based contracts and Beijing is trying hard to liberalise trading.

The scene looks positive for China’s FX markets however until the currency is given ‘full free status’ investors wont have a huge amount of confidence.

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