Renminbi (RMB) currency futures contracts continue to serve as an effective risk management tool in periods of unexpected USD/CNH* volatility, and Hong Kong Exchanges and Clearing Limited (HKEx) is extending incentives to solidify the development of its RMB currency futures market.
“As an international financial centre adjacent to Mainland China, Hong Kong is ideally positioned as the premier RMB risk management centre,” said Romnesh Lamba, HKEx’s Co-head of Global Markets. “Average daily RMB currency futures volume has increased each year since its launch in 2012, and we have reached a record turnover this year surpassing the full-year record in 2014. We expect the extended incentives will help us build on that positive momentum.”
Extended Active Trader Programme
The Active Trader Programme introduced at the beginning of this year has been extended for another year till the end of 2016. The Active Trader Programme provides certain trading fee rebates to a limited number of traders subject to minimum volume thresholds.
Details of the incentive programmes are in the HKEx circular.
Record High Turnover and Participation in the Market
Turnover in HKEx's RMB currency futures contracts reached an all-time high of 8,061 contracts (notional value of US$806 million) on 12 August 2015. On an annual basis, the product reached a record turnover of 254,646 contracts (notional value of US$25.5 billion) from 1 January 2015 to 24 December 2015, exceeding the full-year record of 205,049 contracts (notional value of US$20.5 billion) in 2014. The open interest also continued to grow, having reached 21,072 contracts (notional value of US$2.1 billion) as of 24 December 2015, the highest in 22 months.
There has also been an increase in the number of Exchange Participants (EPs) in the market, with 10 newcomers trading the contract since start of this year, bringing the total number of EPs that have traded the product to 90. In addition, the current six market makers continued to enhance liquidity throughout the year by providing competitive bid-ask prices in the market. HKEx is continuing to work on recruiting new market makers for RMB currency futures.
* USD/CNH: US dollar/Offshore RMB.