HKEx revamp comes with LME deal

Hong Kong bourse hopes to make the most of the acquisition by creating new division and launching more yuan commodities products

PUBLISHED : Tuesday, 08 January, 2013, 12:00am
UPDATED : Tuesday, 08 January, 2013, 4:21am

Hong Kong Exchanges and Clearing has unveiled a new management structure following its takeover of London Metal Exchange.

The exchange would also launch more yuan-denominated commodities products as it moved to take advantage of the internationalisation of the currency, chief executive Charles Li Xiaojia said.

"Buying LME is a long-term strategic move for HKEx to step into commodities. We will launch more yuan-denominated commodities products to meet the hedging need of China, the largest commodities user worldwide," he said at a conference yesterday.

HKEx last month completed its £1.39 billion (HK$17.25 billion) acquisition of LME to branch into commodities trading. LME, the world's largest metal exchange that traded US$15.4 trillion worth of contracts in 2011, handles a range of metals from aluminium to copper and tin.

The exchange yesterday announced a series of senior executive changes, which Li said was needed for the development in the commodities market.

Martin Abbott, while remaining chief executive of LME, will also become co-head of HKEx's newly created global markets division, which will oversee the equities, fixed-income and currency businesses including LME.

The market development division has been dissolved and its head, Romnesh Lamba, will oversee the global markets division together with Abbott.

Lamba will also succeed Gerald Greiner as chief executive of the stock exchange and the futures exchange, while Greiner, who was also chief operating officer, will become head of global clearing.

As announced earlier, veteran British lawyer David Graham will become chief regulatory officer from tomorrow to oversee the listing division, market surveillance, legal services and secretarial services departments. He will be head of listing (designate) initially and will replace current head of listing Mark Dickens, who will retire in July.

Li said how HKEx could benefit from the LME takeover would be detailed in the exchange's next three-year plan.

"The [LME] acquisition will allow HKEx to become a real integrated international exchange with a wide range of businesses," he said.

The exchange needs to find new income sources as it is battling lower market turnover and fewer initial public offerings. Average daily turnover last year stood at HK$53.85 billion, down 23 per cent from 2011. It also ranked as only the fourth-largest IPO market for the year, losing its No 1 title from 2009-11.

"I would like to see a recovery in the IPO market this year. I would also welcome more B-share companies to apply to list in Hong Kong," Li said.

He said that at the end of last year, 58 yuan-denominated products were listed on HKEx.

"The trading volume of these products is not very high at the moment but we expect it will grow over the long term as the yuan becomes more internationalised," he said.