Derivatives marketplace, CME Group and China Securities Index (CSI) Co. Ltd, have entered into a product licensing agreement in a bid to develop their joint index capabilities, according to a CME Group statement.
Under the terms of the new agreement, CME Group will be granting CSI a sovereign license to utilize select CME Group market data to develop, calculate, and appropriate its commodity indices suite. Furthermore, the offering will put out a series of jointly developed products, the first of which being the CSI CME Group China Commodity Consumption Index.
The index will be based futures contracts of soft commodities, as well as Natural Gas, West Texas Intermediate (WTI) Crude Oil, and Copper, Gold, and Silver. The agreement stipulates the provision of the listing, trading, and clearing of derivatives products based on joint commodity indexes to be engineered by CSI and CME Group.
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According to Terry Duffy, Executive Chairman and President of CME Group, in a recent statement on the partnership: “We are pleased to enter into this strategic partnership with CSI. As Chinese futures markets internationalize, the new products that we develop with CSI will provide enhanced risk management opportunities to users in the global commodity markets.”
“China is a key market for us, and this agreement with CSI is another example of our commitment to serve the needs of market users based in China. We look forward to working closely together with CSI in the development and innovation of new products,” added Phupinder Gill, Chief Executive Officer of CME Group in an accompanying statement.
“As capital markets liberalize, the demand for overseas financial derivatives by Chinese investors will increase gradually. CSI has developed indexes based on multiple types of asset classes in different markets for over ten years. The cooperation with CME Group is an important component of the overseas development strategy of CSI. We look forward to working together with CME Group to provide diverse indexes and derivatives products to meet the needs of the markets,” noted Ma Zhigang, Chief Executive Officer of CSI.
Earlier this month, CME Group reported its figures for the month ending August 2015, which showed average daily volumes (ADV) of combined futures and options at 888,599 contracts, 27.4% MoM above July’s trading.