Hong Kong Exchanges and Clearing Ltd is the holding company for the city’s stock exchange, futures exchange and clearing company. Its market capitalisation made it the world’s biggest listed bourse as of the end of 2012. In December 2012, the HKEx clinched the US$2.2 billion takeover of the London Metal Exchange, the world's biggest marketplace for industrial metals.
HKEx calms fears in London and China
Charles Li highlights partnership and co-operation in the bourse's move to diversify into commodities trading
Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia tried to assure members of the London Metal Exchange and mainlanders yesterday that HKEx's plans to expand into commodities would not be a threat to them.
HKEx completed the acquisition of the LME in December last year to diversify into commodities trading as part of the city's plan to develop into a centre for such trading. Some mainland and London players are worried Hong Kong is going to capture part of their business.
Speaking at an LME Week seminar packed with Westerners and mainlanders yesterday, Li first spoke in English, unveiling HKEx's plan to introduce new commodities products in Hong Kong and emphasising it would not hurt trading on the LME.
The Beijing-born Li then surprised the audience by switching to Putonghua to directly address mainland exchange officials and users, assuring them Hong Kong would not be a threat.
"There will be competition between the Hong Kong commodities trading platform and the mainland's, but then we will also be partners as we can co-operate with each other," he said.
Li said he grew up in a farming family, where they had a saying: "We will not take away the food from your bowl, your pot or your farm. We will share the food with you from the field we grow together."
He said: "We will strive for a balance between co-operation and competition with mainland commodities exchanges. We will not develop products that threaten to capture their existing business. Instead, it is our long-term goal to seek co-operation with them to develop new products together and share the profit."
He said HKEx would not move to Hong Kong the trading of LME products with physical delivery but would introduce new cash-settled products.
"We will consider products with different tenures and contract sizes from the LME products," Li said in English. "We may consider introducing commodities products that are not metal contracts. We may also think about introducing yuan-denominated products that are not traded in London.
"LME will need to be changed from a non-profit-making organisation to a company run on commercial terms. But we will make sure there will be no change in any rules or fees of the LME until 2015."
He said developing the commodities market in the city would need the involvement of London, Hong Kong and the mainland.
"The LME in London has the product design experience and a good trading model, while HKEx has the electronic trading platform. But this is not enough as we will need Chinese end users' participation for the local commodities market to develop well," Li said.