The launch of Hong Kong Mercantile Exchange (HKMEx), a new
commodities exchange aiming to offer a unique mix of
international and mainland Chinese participation, has been
officially slated for the first quarter of next year.
It is believed that Hong Kong was planning a commodity
platform to bridge the gap between China’s vast
but protected domestic markets and international trade,
especially after recent comments in favour of commodity futures
by John Tsang Chun-wah, the province’s financial
HKMEx has revealed that Tsang will have an executive role in
the new platform along with the president, Thomas McMahon, a
former New York Mercantile Exchange director in Asia, and
chairman, Barry Cheung. Cheung is also a former deputy chairman
of oil trader Titan Petrochemicals, which will become a
shareholder in the new exchange.
As expected, HKMEx will launch with a dollar-denominated oil
contract with physical delivery in China; also it hopes
eventually to list other commodities including soybeans and
According to Cheung, HKMEx will provide an "efficient and
transparent pricing platform for end-users and the global
trading community to trade tailor-made contracts, hedge pricing
risks in China and across the region, lower transactions costs
and increase participation by Chinese commodities traders".
London-listed software provider Patsystems has been
contracted to provide the new exchange’s front-end
trading and risk management systems. The independent software
vendor’s chief executive, David Webber, described
the launch as "a milestone event for our industry", with the
new exchange being supported by "blue-chip organizations".
LCH Clearnet has been chosen to clear the exchange.
However, the initial reaction to the new platform was mixed,
with many sources expecting to take a wait-and-see approach
before committing to trading. One Asian commodity trader, based
in Singapore, told
FO Week that it would be "difficult to ignore a liquid Hong
Kong/China commodities market – but we probably will
not dip our toes until we are sure it is really there".
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