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HKEx to launch metals, coal futures contracts later in ’14

Keywords: Tags  LME, HKEx, London Metal Exchange, Hong Kong Exchanges & Clearing, aluminium, zinc, copper, thermal coal Charles Li

HONG KONG — Hong Kong Exchanges & Clearing Ltd. (HKEx) has confirmed it will launch four futures contracts—aluminum, copper, zinc and thermal coal—later this year.

"We want to be the Chinese exchange of choice for international clients," HKEx chief executive officer Charles Li said at an April 22 press conference in Hong Kong.

The commodities platform will be running by the third or fourth quarter, subject to regulatory approvals, to meet the needs of the industry in Asia and help to grow the bourse’s commodity footprint in the region, Li said.

"These (new) contracts are targeted at ... Chinese physical traders and Chinese retail," HKEx head of Asia commodities Rebecca Brosnan said, comparing the HKEx planned launches to the London Metal Exchange minis, which were launched in partnership with Singapore Exchange Ltd.

The HKEx’s planned mini contracts are not intended to "cannibalize" business from the LME’s existing products, Li said, and is confident that any loss of volume on the LME will be made up by additional incremental activities that are stimulated by the HKEx products.

"I don’t see us as competing" with other mainland exchanges, such as the Shanghai Futures Exchange, the Dalian Commodity Exchange and the Zhengzhou Commodity Exchange, which have similar commodities products, Li said. "The products create significant arbitrage and hedging opportunities and a more efficient market."

The HKEx’s monthly London aluminum mini futures, London copper mini futures and London zinc mini futures contracts will use the official settlement price published by LME for its aluminum, copper and zinc contracts at the last trading as their final settlement prices.

The API 8 thermal coal futures contract will trade in U.S. dollars with a 200-tonne-per-lot contract size. The final settlement price will be the average of all API 8 prices published in the Argus/McCloskey’s coal price index report in the expiring contract month.

A version of this article was first published by AMM sister publication Metal Bulletin.

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