CME to launch renminbi futures in August

The Chicago Mercantile Exchange (CME) is to launch futures and options on futures on renminbi exchange rates against the US dollar, euro and the yen. The contracts will begin trading on August 27, CME officials told reporters at the opening of the CME Asia-Pacific headquarters in Hong Kong.

The decision to launch new renminbi contracts, which will trade exclusively on CME’s Globex electronic trading platform, came as a result of demand from global investors and market participants, said John Davidson, CME managing director and chief corporate development officer. The contracts are intended for global financial institutions, corporates and investors to hedge fluctuations in those exchange rates and manage risk, he added.

The renminbi futures contracts will have a contract size of RMB1 million ($124,682), and delivery will be 13 months plus two quarters.

CF Wong, the CME’s managing director for Asia, will head the new Hong Kong office. The CME currently operates offices in Tokyo and Sydney and has its telecommunications hub in Singapore. “The Singapore telecommunications hub has grown quickly into one of the most active hubs globally,” Davidson said.

During the past two years, the CME has launched a number of initiatives targeted at Asia-based investors. In May, for example, the CME, in conjunction with the Korean Ministry of Finance and Economy, unveiled that they would launch futures and options on the Korean won, which are scheduled to begin trading on September 17. In addition, the CME has also launched CME E-mini S&P Asia 50 and CME E-mini MSCI EAFE futures contracts, which are intended to be hedging tools for international equity portfolios.

In May, the Chicago and the China Foreign Exchange Trade System (Cfets) unveiled plans for a multi-year agreement in Shanghai to allow Chinese investors to trade CME’s foreign exchange and interest rate products. Responding to questions from reporters about whether domestic investors in China will be able to trade the new renminbi futures, Davidson said it is up to Chinese regulators to decide if any eligible participants in China can trade.