ICAP’s electronic foreign exchange business EBS, which is operating under the subsidiary BrokerTec, has launched the first electronic FX benchmark for the Chinese yuan. The new renminbi reference rate for the offshore Chinese renminbi has been developed in conjunction with ICAP Information Services, which is the information division of the company.
The ‘EBS CNH Benchmark’ is the first fully electronic, trade-backed reference rate for the offshore Chinese yuan market. The launch is in response to increasing demand from a number of major Chinese financial institutions and crucially, senior onshore authorities.
internationalization and liberalization of the renminbi will benefit from a reliable and transparent benchmark
“The continued internationalization and liberalization of the renminbi will, no doubt, benefit from a reliable and transparent benchmark in the EMEA time zone. Such a credible benchmark will, over time, aid CNH product development increasing the effectiveness of hedge instruments available to EMEA based clients,” added the Director of Local Currency Markets at ICBC Standard Bank, Gary Licht.
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The ‘EBS CNH Benchmark’ will be published on a daily basis at 08:30 GMT (16:30 Beijing). The timing has been selected to coincide with the close of the onshore Chinese yuan (CNY) market. With the close of trading in mainland China both rates may be directly compared.
The CNH market continues to grow exponentially
The benchmark will provide the first transparent reference rate for offshore RMB trading in international markets. It is calculated and distributed by ICAP Information Services, incorporating rates from executed trades during the fixing window, using data from the EBS Market central limit order book.
ICAP’s EBS has cemented its position as the leading trading venue for the offshore Chinese yuan globally. At present 70 per cent of all CNH interbank trading is conducted via EBS Market with USD/CNH holding the third spot for most traded currency pair on the platform.
Commenting on the announcement, the Co-Head of EBS BrokerTec Markets, Darryl Hooker, said: “The CNH market continues to grow exponentially with more market participants trading USD/CNH than ever before. As a result, there is an industry need for an innovative benchmark which accurately and reliably captures the true reference rate, at the Asia-Europe crossover.”