Rival's exit won't sway HKEx on commodities

Failure of HKMEx has no bearing on exchange's diversification bid built on LME move, chief says

PUBLISHED : Wednesday, 22 May, 2013, 12:00am
UPDATED : Wednesday, 22 May, 2013, 4:03am

Hong Kong Exchanges and Clearing will proceed with its plan to venture into commodities trading despite the failure of its short-lived rival.

The Hong Kong Mercantile Exchange (HKMEx), set up two years ago to develop commodities trading by launching gold and silver contracts, handed back its trading licence to the Securities and Futures Commission on Saturday after it failed to generate enough revenue to support its operating expenses.

While brokers said this might reflect the difficulties the city faced in introducing commodities trading, HKEx chief executive Charles Li Xiaojia said his bourse's diversification plan would not be affected by the closure of HKMEx.

"Our business does not have any relationship with HKMEx," Li said. "As such, our expansion plan would not change as a result of anything that happens to HKMEx."

HKEx completed a £1.39 billion deal (HK$16.4 billion) in December to acquire London Metal Exchange (LME), the world's largest metal exchange, in a bid to get into commodities trading.

"The acquisition of the LME is a long-term plan for the HKEx to diversify its business into commodities trading, in addition to our cash and derivatives markets. This is to turn the HKEx into a multi-asset trading exchange and cut down our reliance on stock market turnover," Li said.

He said the exchange would host several events about LME next month, while the bourse is also studying introducing some LME products to be traded in Hong Kong. "We are heading in the right direction to develop commodities trading, as this would attract more international investors to trade in the Hong Kong market," he said.

Li hosted a ceremony yesterday to mark the introduction of a programme called The Women's Exchange, which, initiated by HKEx staff, is intended to promote leadership roles in listed companies by women.

In its first campaign, HKEx will provide training programmes to help its female staff who have stopped working for a few years to take care of children. The training will bring them up to date with the market environment and latest regulatory issues.

"Creating a positive environment where women can thrive in senior leadership positions is something we feel passionate about as a company," Li said.