The Hong Kong Exchanges and Clearing Limited (HKEX) has made an encouraging start to trading on offshore renminbi (CNH) and US dollar (USD) gold futures, with volumes, liquidity and open interest building well since the first day of launch.
The new contracts, which rolled out today, saw a total volume of more than 3,000 contracts, exchanged by 20 qualified participants, the exchange operator said.
The instruments are designed to add another layer of bullion trading, aiming for a chunk of the multi-billion dollar gold business, and includes contracts for spot and monthly futures. The 12 contract months on launch day comprised the spot month (August 2017 ) and next 11 calendar months (September 2017 to July 2018).
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The inclusion of the new contracts is a further expansion of HKEX metals solutions, and serves to enhance market transparency, reduce risk and lower costs for users. It also marks the first pair of commodity futures that can be physically delivered in Hong Kong.
The HKEX sees an opportunity as increasing regulatory scrutiny is raising costs for banks trading gold over the counter (OTC) in bilateral deals. Regulators are pushing for a more transparent, centrally-cleared model.
The HKEX has waived the fees for trading and clearing for the new contracts during the first six months. In addition, the new products are exempted from the Commission Levy throughout the same period.
Liquidity providers and proprietary traders have partnered with the HKEX and committed to supplying liquidity. They also will run an educational program to enhance investors’ knowledge of the new gold futures.