Hong Kong exchange to launch yuan options on March 20

New product will complement the world’s biggest offshore yuan market

PUBLISHED : Thursday, 16 February, 2017, 9:31pm
UPDATED : Thursday, 16 February, 2017, 9:31pm

The trading of yuan options contracts will begin on March 20 this year, Hong Kong Exchanges and Clearing Limited (HKEX) announced on its website on Thursday evening.

The US dollar-offshore yuan (CNH) options will be the first currency options traded at HKEX. It will complement the exchange’s US dollar offshore yuan futures trading.

On the start date, the contract months for the USD/CNH options contracts available

for trading are April 2017, May 2017, June 2017, July 2017, September 2017, December 2017,

March 2018 and June 2018, the announcement said.

The block trade volume threshold for the USD/CNH options contracts is 50 contracts for each

contract month. Based on Hong Kong’s exchange rules, the price at which a block trade is

executed must be fair and reasonable, the announcement said.

HKEX accounts for about two-thirds of the open interest – or number of contracts outstanding in options trading – for all the world’s exchange-traded USD/CNH futures.

The total trading volume of HKEX’s USD/CNH futures in 2016 rose 105 per cent from the previous year to an all-time high of 538,594 contracts, HKEX statistics show.

The yuan, also known as the renminbi, fell 6.6 per cent against the dollar last year, its worst annual drop since 1994, boosting interest in yuan derivative products to hedge currency risk.

Yuan deposits in Hong Kong fell to 546.7 billion yuan by the end of December, a sharp 35 per cent fall from 851.11 billion yuan in 2015 and down 46 per cent from the peak of 1.004 trillion yuan in December 2014, according to the Hong Kong Monetary Authority.