Shanghai Clearing House Partners with R5FX for Cross Border Clearing

The new platform helps Chinese and overseas banks to get access to a more liquid and transparent marketplace.

In what is a first in China, and yet another step in the ongoing process of renminbi internationalization, the Shanghai Clearing House is launching the first cross-border foreign exchange clearing platform.

The project is expected to be deployed next month. London-based R5FX is actively participating in the development and realization of the first Chinese cross-border foreign exchange clearing solution. The company already has expertise in the field with its clearing platform for EMFX traders.

The Shanghai Clearing House will deploy trade clearing infrastructure within mainland China, as R5FX opens access to its clearing infrastructure in London and several other international markets where it is operating like Hong Kong, Singapore, and New York.

Commenting on the project, the general manager of product development department at Shanghai Clearing House, Cheng Leilei, said: “We have chosen London because it is a leading international foreign exchange hub with 40 percent of global foreign exchange trading.”

London – the Main Offshore Renminbi Center Outside Asia

The new trading platform enables onshore Chinese banks to trade with overseas banks. The initial phase of the product deployment will enable foreign exchange transactions with bonds and derivatives down the pipeline.

Elaborating on the milestone and its importance for renminbi internationalization, the People’s Bank of China’s chief representative in Europe, Jin Mei, said: “China has decided to continue opening up. In the last several years, the PBOC has taken effective steps to reduce foreign exchange controls and prudently promote renminbi convertibility.”

London continues to be a big hub for offshore renminbi trading with its title as the biggest venue for such trades outside of Asia. According to the Society for Worldwide Interbank Financial Telecommunication, during the first quarter of 2017, 36.3 percent of global offshore renminbi exchange transactions were executed via London.

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