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HKEx Announces Plans for its First Asia Commodities Contracts

Products
22 Apr 2014

Hong Kong Exchanges and Clearing Limited (HKEx) plans to launch its commodities business with four futures contracts that will be traded in its derivatives market in Hong Kong: London Aluminium Mini Futures, London Zinc Mini Futures, London Copper Mini Futures and API 8 Thermal Coal Futures.  HKEx aims to introduce the contracts later this year, pending regulatory approval and market readiness.

"The rationale behind our Asia Commodities platform is to meet the needs of the industry here in Asia, and provide currency convenience through contracts in Renminbi (RMB)," said HKEx Chief Executive Charles Li.  "The interest in this year’s LME Week Asia shows how important Asia is to the global commodities business."

"This is just the beginning of our Asia Commodities plan," Mr Li added.

The London Metal Mini Futures

The London Metal Mini Futures will be traded in RMB, with contract size of five tonnes each.  The Final Settlement Price will be the Official Settlement Price determined and published by the London Metal Exchange (LME) for the London Aluminium/ Zinc/ Copper Futures Contract on the Last Trading Day on the LME.  These contracts will cover the Spot Month and the next 11 calendar months.

Large versions of the metals contracts are the LME's top three contracts by turnover volume and value.  In the first quarter of this year, their volume accounted for more than 80 per cent of the LME’s futures volume.

The API 8 Thermal Coal Futures Contract

Energy and commodity publisher Argus and business information provider IHS are licensing the API 8 coal index to HKEx for listing of the API 8 Thermal Coal Futures.  The index tracks the price for coal (5,500 kcal/kg NAR, or net as received) delivered to south China.  API 8 is part of a series of indices used for international physical and derivatives coal business.

The API 8 Thermal Coal Futures Contract will trade in US dollars, with a contract size of 200 tonnes.  The Final Settlement Price will be the monthly average of all API 8 prices published in the Argus/McCloskey's Coal Price Index Report in the expiring contract month.  The contract will cover the Spot Month and the next 23 calendar months.

Thermal coal is a leading fuel for power generation.  In Mainland China, around 70 per cent of the electricity comes from coal-fired power plants.  The Mainland is among the largest producers, consumers and importers of thermal coal.  The other largest consumers include Japan, India, South Korea and Taiwan.

Trading Details

All the four contracts will be traded on Hong Kong Futures Exchange Limited (HKFE) and cleared through HKFE Clearing Corporation Limited.  All the contracts will be monthly cash-settled futures contracts.  The trading hours for the new London Aluminium/ Zinc/ Copper Mini Futures will be 9:00 am to 4:15 pm and 5:00 pm to 1:00 am the next morning Hong Kong time Monday to Friday, excluding the public holidays on HKEx’s trading calendar.  The trading hours for the thermal coal futures will be 8:00 am to 4:15 pm and 5:00 pm to 1:00 am the next morning Hong Kong time Monday to Friday, excluding the public holidays on HKEx’s trading calendar.  Pre-holiday arrangements will also be the same as those for existing contracts traded on HKFE.  Key contract specifications are shown in the tables below subject to regulatory approval.

Item London Aluminium Mini Futures London Zinc Mini Futures London Copper Mini Futures
Underlying Commodity High Grade Primary Aluminium
as defined in the LME Rules from time to time
Special High Grade Zinc
as defined in the LME Rules from time to time
Copper – Grade A
as defined in the LME Rules from time to time
Contract Size 5 tonnes
Trading and Settlement Currency RMB
Contract Months Spot Month and the next eleven calendar months (monthly contracts)
Trading Hours* 9:00 am to 4:15 pm (day trading session) and 5:00 pm to 1:00 am
(after-hours trading session)*
Trading Platform HKATS
Tick Size RMB 5 / tonne RMB 10 / tonne
Last Trading Day Two business days before the 3rd Wednesday of the spot month
Final Settlement Price Official Settlement Price determined and published by the LME on the
Last Trading Day
Settlement Method Cash-settled
Holiday Schedule Follow HKEx holiday schedule

 

  

Item API 8 Thermal Coal Futures
Underlying Commodity API 8 Thermal Coal Index
Contract Size 200 tonnes
Trading and Settlement Currency US dollar
Contract Months Spot Month and the next twenty-three calendar months (monthly contracts)
Trading Hours* 8:00 am to 4:15 pm (day trading session) and 5:00 pm to 1:00 am
(after-hours trading session)*
Trading Platform HKATS
Tick Size USD 0.01 / tonne
Last Trading Day The last Friday of the Contract Month
Final Settlement Price The monthly average API 8 Index published in the Argus/McCloskey's Coal Price Index Report on the last Friday of the expiring Contract Month
Settlement Method Cash-settled
Holiday Schedule Follow HKEx holiday schedule

* subject to regulatory approval

Argus Media
Argus is a leading provider of price assessments, business intelligence and market data on the global crude and products, natural gas, coal, electricity, emissions and transportation industries.  It is headquartered in London and has offices in Houston, Washington, New York, Portland, Calgary, Johannesburg, Dubai, Singapore, Tokyo, Beijing, Sydney, Moscow, Astana, Kiev, Santiago and other key centres of the energy industry.  Argus was founded in 1970 and is a privately held UK-registered company. Learn more at www.argusmedia.com.

IHS (www.ihs.com)
IHS is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, US, IHS is committed to sustainable, profitable growth and employs more than 8,000 people in 31 countries around the world.

IHS produces its portion of the API 8 in association with Xinhua Infolink, a leading privately owned, independent Chinese intelligence and insight provider.

*Trademark and copyright notice
API 8 is a trademark of and is used under license from Argus Media Limited and IHS Global Limited.  All copyrights and database rights in the API 8 indexes belong exclusively to Argus Media Limited and IHS Global Limited and are used herein under license.  Argus and IHS take no position on the purchase or sale of HKEx’s financially settled listings.

Argus, the Argus logo and Argus Media are trademarks of Argus Media Limited.

IHS, the IHS logo and McCloskey are trademarks of IHS Global Limited.

 

Ends

Updated 22 Apr 2014

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