Hong Kongs recently established commodity exchange the Hong Kong Mercantile Exchange (HKMEx) has been going from strength to strength as the exchange is welcomed by Hong Kong, Chinese & neighbouring financial services firms as an ideal executing venue for the yellow metal (& Silver). The exchange announced the additions of China-backed Essence Futures (Hong Kong) Limited and Taiwan backed-CSC Futures (HK) Limited as broking members, bringing total Exchange membership to 40 firms.
The exchange was set up in may 20111 and serves as a primary trading venue with direct access to China. The HKMEx trades two contracts, a gold futures contract and a silver futures contract, both in denominated in US$.
With commodities, particularly precious metals being the talking point over the last three years the exchange has witnessed pleasant trading volumes. The average daily trading volume since the exchange was launched is 5,121 contracts with turnover since launch reaching US$119 billion.
“It is our pleasure to welcome Essence Futures and CSC Futures as the sixth and seventh members to join our Exchange this year,” said HKMEx Co-President Jane Wang. “Their additions once again strengthened our membership base from within Greater China which to date includes some of the most well respected brokerages in the region. We welcome this strong interest in HKMEx’s current products and services as well as the upcoming launch of our renminbi futures contracts.”
Han Hui, Executive Director of Essence International Financial Holdings said: “As an emerging international exchange, HKMEx provides Essence with additional opportunities to establish stronger business relationships with global market participants. This will allow us to continue to leverage on support from our mainland Chinese parent company to expand our futures business in new markets.”
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Steven Chou, Managing Director of CSC Futures (HK) said: “As active participants in global markets, we are pleased to join HKMEx’s trading community. The addition of HKMEx’s product portfolio allows us to better meet the competitive trading needs of our clients as our group continues to pursue our goal to be a leading player in the financial services sector in Asia.”
Essence Futures (Hong Kong) services customers seeking investment, hedging, and arbitrage opportunities in local as well as overseas futures markets. It is part of Essence Securities Company Limited, a major brokerage in mainland China with 120 branches and offices across 18 provinces, serving over one million customers.
CSC Futures (HK) is a wholly-owned subsidiary of Capital Futures Corporation, a top tier futures commission merchant listed on Taiwan’s GreTai Securities Market. Capital Futures Corporation is a member of the Capital Group, a major financial services firm listed on the Taiwan Stock Exchange whose services include corporate finance, derivatives, proprietary trading, brokerage, asset management and investment banking.
The firms will be able to utilise HKMEx’s electronic platform for commodities trading in the Asia Pacific time zone, both proprietarily and on behalf of clients, providing customers with improved access to both regional and international commodity trading market participants.
HKMEx currently offers a 32 troy ounces (1 kilo) gold futures contract and a 1,000 troy ounces silver futures contract. Both are denominated in US dollars with physical delivery in Hong Kong. Going forward, the Exchange plans to launch gold, silver and copper contracts denominated in renminbi, followed by other products in precious and base metals, as well as energy, agriculture, and commodity indices. The Exchange has six clearing members and 34 broking members.
The commodity exchange plans to develop RMB commodity futures contracts, first in gold and silver, then copper and other metals. As China’s commodity consumption continues to grow and its currency becomes more internationalized, there is a strong market appetite for risk management tools in the Chinese currency. The exchanges states in a statement for Forex Magnates, “Our upcoming RMB product offerings are designed to address this soaring demand by both international and mainland Chinese participants for hedging instruments that are priced and settled in RMB. These innovative RMB contracts, together with our USD product offerings, will enable investors to transfer risk, enhance investment protection and optimize portfolio performance.”