HKEX launches dual-currency gold futures

Updated 2017-07-11 10:00:37 Global Times

HK's deal with London set to bridge Eastern and Western markets

Hong Kong Exchanges and Clearing Ltd (HKEX) launched a dual-currency gold futures contract in Hong Kong and a gold futures contract as part of its LMEprecious in London on Monday, which is set to become a good way to connect the Eastern and Western markets.

This is the first time HKEX launched the gold futures in both Hong Kong and London at the same time, Charles Li Xiaojia, chief executive of HKEX, said on Monday.

HKEX introduced offshore yuan and US dollar gold futures in Hong Kong on Monday, which was the first pair of commodity futures that can be physically delivered in Hong Kong, according to HKEX.

When asked about supervision in the market, Li said that he prefers actions over words and will give time for the market to adapt.

He also stressed that there's no need to magnify certain problems in the market.

Li said the long-term plan is for Hong Kong to become one of the world's most important gold price-setting centers, domestic news portal reported on Monday.

The offshore yuan gold futures contract will be a valuable addition to HKEX's expanding portfolio of yuan products, HKEX said in a previous statement. The contract's synergy with the dollar, offshore yuan futures and other yuan derivatives will create arbitrage opportunities, according to HKEX.

The underlying asset for HKEX's gold futures, a 1 kilogram gold bar no less than 0.9999 fineness, "makes them ideal for Asia," HKEX said.

The dual-currency gold futures are traded from 8:30 a.m. to 1 a.m. the next morning per trading day in Hong Kong.

"HKEX's move will offer market participants more choices and will give more options for investors with offshore yuan," Sun Yonggang, a senior analyst of the research arm of Chaos Ternary Futures Co in Shanghai, told the Global Times on Monday.

It's helpful for gold users, such as refiners, banks or fund managers, to hedge gold price risk, Sun noted.

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