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HKEx looks at link-up with mainland bourses on commodity sales

City's bourse is exploring ways to develop trading in commodities in Hong Kong, including deals with mainland exchanges

PUBLISHED : Thursday, 25 April, 2013, 12:00am
UPDATED : Thursday, 25 April, 2013, 5:40am
 

Hong Kong Exchanges and Clearing is looking at a link-up with the mainland's commodities exchanges to develop commodities trading in the city, chief executive Charles Li Xiaojia said yesterday.

Speaking after the annual general meeting of HKEx, which acquired London Metal Exchange (LME), the world's largest base metals exchange, in December, Li said the bourse would explore different aspects of commodities trading this year, including studying how to establish a link with commodities exchanges on the mainland.

It would also establish a commodities clearing and settlement system and examine what types of commodities would be most suitable for trading in Hong Kong, Li said.

"The existing clearing system of the exchange is tailor-made for securities and futures trading. The clearing and settlement systems for commodities are very different," he said.

Initially, commodities trading in the city was likely to use cash settlement, before progressing to physical delivery, which would be more complicated, Li said.

"These studies will establish the infrastructure for commodities trading on the HKEx," he said.

He said the bourse expected them to "yield fruit for our commodities trading next year".

The worst of the financial crisis is over, but the global economy still faces a lot of uncertainties. When the market bounces back, we are going to see more international firms seeking a listing in Hong Kong

HKEx's chairman, Chow Chung-kong, said the exchange planned to have a commodities week in June, hosting seminars to allow the city to learn more about LME.

Chow said turnover in the night futures trading session from 5pm to 11pm, which HKEx launched earlier this month, had gradually picked up to about 5,000 contracts a day, equivalent to about 3 per cent of daytime trading.

Overseas experience shows night trading is usually about 10 per cent to 40 per cent of day trading turnover.

Yesterday was Ronald Arculli's last day as a director of HKEx, a role he played for seven years, during the first six of which he was also chairman.

During Arculli's chairmanship, he actively promoted listings of international firms in the city and led the exchange through the global financial crisis of 2008-09.

Arculli blamed the poor global economy and weak market sentiment for the fact that fewer international firms listed in Hong Kong last year than in previous years.

"The worst of the financial crisis is over, but the global economy still faces a lot of uncertainties," Arculli said after the annual meeting. "When the market bounces back, we are going to see more international firms seeking a listing in Hong Kong."

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