Hong Kong Mercantile Exchange closes its doors
Two years after opening, cash crunch forces chairman Barry Cheung to give up licence, but he says investors won’t lose and funds will be raised
The Hong Kong Mercantile Exchange will go ahead with a planned US$100 million rights issue and be ready within months to reapply for the trading licence it handed back to regulators at the weekend after it became clear the struggling commodity trader could no longer meet crucial financial criteria.
HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Post that the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.
"There is no question of not getting your money back or anything like that. People absolutely do not have to worry about that and I don't think they are.
"The only thing they will want to know is what settlement price will be used," Cheung said.
HKMEx was working with LCH.Clearnet - the world's largest clearing house for financial transaction settlements - to arrange settlement pricing on the exchange's roughly 200 outstanding contracts, Cheung said.
The tiny number of outstanding contracts reflects the difficulty HKMEx has had in attracting trades to the platform that officially opened almost two years ago to the day on May 18, 2011.
In contrast, the London Metal Exchange, owned by Hong Kong Exchanges and Clearing, saw record volume in April of 14.5 million lots traded. The Chicago Mercantile Exchange, the world's biggest commodity trading platform, traded 11.6 million contracts daily in April.