HKEx To Introduce Asian FX Futures, Gold Contracts

The Hong Kong stock exchange plans to launch renminbi currency futures and gold contracts in 2016.

Stock exchange group Hong Kong Exchanges and Clearing Limited (HKEX) has announced its plans to launch renminbi currency futures contracts against the Indonesian rupiah and the Malaysian ringgit “sometime in the coming months”, according to Chief Executive, Charles Li.

The news follows February’s announcement to introduce several new futures contracts across a total of seven sectors of its stock market in May 2016

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There has been a growing push by HKEx, one of the top five exchanges in Asia, to diversify its revenue streams away from its traditional equity trading business because of weak stock markets. Investor demand for equities in both Hong Kong and the mainland has slowed down in recent months due to a weaker outlook for corporate earnings and a slowing economy.

At the same time, net purchases of mainland shares under a landmark Shanghai-Hong Kong Stock Connect scheme launched in October 2014 remains low. According to sources, the northbound aggregate quota usage remains at 42 percent while the southbound, or the Hong Kong leg is at 54 percent.

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In contrast, its offshore renminbi/dollar currency futures contract launched in September 2012, has gone from strength to strength. Stock exchange data reveals that in February, for example, there was a record high in turnover with more than 3,700 contracts traded due to increased volatility in global currency markets.

Adding to last month’s positive earnings release in which HKEx reported a robust 2015, with a surge in profits of 54% year-on-year, Li also announced that the exchange hopes to launch a gold settled contract in the third quarter of 2016, adding that “if 2015 was the year of equity, 2016 is the year of derivatives, futures and options”.




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