European and US traders have a new way of accessing the vast onshore Chinese markets, by using US tech firm CQG and Hong Kong broker Bands Financial.

Bands, an approved Overseas Intermediary of the Dalian Commodity Exchange, the Shanghai International Energy Exchange and the Zhengzhou Commodity Exchange, has reached an agreement with CQG so its clients can trade in China.

The agreement is significant because CQG's numerous trading customers in Asia, Europe and North America can use the tech firm’s state-of-the-art arbitrage technology to trade price discrepancies between the international and onshore Chinese markets.

John Browning, managing director of BANDS Financial, said in a statement: “Many of our clients execute arbitrage strategies combining the mainland markets in Shanghai, Dalian and Zhengzhou with the international marketplaces of CME, ICE, LME, SGX and HKEx, etc. The addition of CQG enables traders to diversify the tools that they use to access these markets.” 

Benjamin Soong, CQG’s president, APAC, said: “Over the last several years, we have seen rapid development across the four major Chinese commodity exchanges and increasing interest from investors across the globe.”

The announcement marks the latest milestone in the gradual opening-up of the domestic Chinese markets to international traders.

The timing is significant because the Dalian and Shanghai exchanges are set to reinstate night trading on May 6, some three months after cancelling the night session in early February due to the escalating coronavirus epidemic.

The night sessions are crucial to international traders looking to exploit price differences between the international and Chinese markets because the US and European markets are busiest during the Chinese night trading sessions. 

The Chinese exchanges are also planning to make more of their most-traded domestic products available to international firms.

Tiger Shi, managing director of BANDS Financial, said: “We look forward to the further opening up of the Chinese futures markets with the addition of copper, fuel oil, a freight index, soybean oil, soybean meal and palm oil  to the group of domestic contracts including crude oil (INE), iron ore (DCE), PTA (ZCE) and rubber (INE) already open to international investors.”

The Dalian Commodity Exchange launched in late March liquefied petroleum gas (LPG) futures and options contracts.