Hong Kong Exchange OKEx Rolls Back Futures Transactions
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Today we launched a dual-currency gold futures contract in Hong Kong that is physically-settled, and a gold contract as part of LMEprecious on the LME. They mark a number of firsts: The vast majority of the gold Mainland China imports comes through Hong Kong. The price of gold is heavily influenced by macro-economic trends, in addition to things like supply and demand. Currently the price of gold is set through the OTC market in London and futures trading in New York, both of which are many time zones away from the largest consumer of gold in the world: Asia is severely under-represented when it comes to influencing gold pricing.
This creates new demand for gold trading in an Asian time zone, a need for physical settlement, and demand for hedging future trading company hong kong risk management tools. Hong Kong already has many important ingredients to become a gold trading hub: It also brings other benefits, such as attracting investors who want to add gold to their portfolio and providing more investment options for offshore RMB deposits.
Our long-term plan is to build Hong Kong into a commodities, currencies and risk management centre, and gold ticks all three of those boxes. London future trading company hong kong also the perfect place to introduce on-exchange gold futures trading. LMEprecious will bring greater transparency to precious metals trading by bringing more transactions onto the exchange-traded market, support and aid ongoing regulatory change, provide additional robustness to future trading company hong kong market, broaden market access, make trading more capital efficient and trade lifecycle management easier.
It will accommodate the interests of the full range of market stakeholders and reinforce the strengths of the London market. While the contracts are not fungible, we are launching in Hong Kong and London at future trading company hong kong same time to promote synergy and create on-exchange liquidity to complement the OTC markets and provide further risk management and arbitrage opportunities across different time zones. Physical settlement is important, too. If these contracts were purely cash-settled, there could be a price discrepancy between the US dollar and CNH tranches.
But with physical settlement, smart investors will be able to arbitrage the price differences in the two liquidity pools, which future trading company hong kong then lead to price convergence. This physical delivery option keeps the implied exchange rate between the two liquidity pools honest.
This is unique, future trading company hong kong gives professional investors the option to use the new dual-currency gold futures as well as CNH options to create a powerful derivatives strategy.
In London, future trading company hong kong is already a global gold centre, LMEprecious will meet the needs of investors who want access to exchange-traded, transparent and centrally-cleared precious metals.
The contracts will include spot, daily, monthly and quarterly futures out to five years for both gold and silver. This is also another key step in our goal to build out a multi-asset class exchange with a focus on China. Gold is an important contract that diversifies our portfolio of CNH-denominated products, moves Hong Kong forward as an RMB pricing centre, and gives investors even more options in the Hong Kong and London markets. Share your thoughts on Charles Li Direct with us.
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