HKMEx to launch trade in gold, silver futures

The new Hong Kong Mercantile Exchange (HKMEx), whose aim to launch fuel oil contracts was frustrated by weak demand, said it planned to launch gold and silver futures in the fourth quarter even though it had not received the licence for the products.

The exchange would start inviting trading members next month in preparation for the launch, chairman Barry Cheung Chun-yuen said yesterday.

HKMEx, a body announced a year ago, initially planned to offer spot trading for fuel oil futures contract in March this year.

Mr Cheung said the long delay was due to many factors, including the drastic changes in the global financial markets.

The application for the licences to run the futures exchange and the launch of gold and silver futures were still in progress, but he was confident the first products could be introduced in the final quarter, judging from the preparatory work.

However, market watchers poured cold water on the mercantile exchange's plan, saying it was hard for it to attract investors and compete with well-established markets such as the New York Mercantile Exchange.

'Hong Kong investors tend to trade gold futures through the traditional [over-the-counter] platform. I'm sceptical on the demand,' said Horace Kwan Pak-leung, deputy chief operating officer of Celestial Commodities.

'Even trading of Hong Kong Exchanges and Clearing's gold futures is very thin. How can a new exchange with little popularity gain investor confidence?'

According to HKMEx's plan, it will offer physical delivery in Hong Kong for the gold traded on the exchange by using the precious metals depository facilities at the city's international airport.

Mr Cheung said the exchange would launch other commodity products in the months ahead, based on customer demand in Greater China and across the region.

Meanwhile, the exchange has announced seven new independent non-executive directors. They are Raymond Chien Kuo-fung, Fan Gang, Dominic Ho Chiu-fai, Kang Dian, Christine Loh Kung-wai, Alasdair Morrison and Richard Wong Yue-chim.