International derivatives marketplace CME Group Inc (NASDAQ:CME) and China Foreign Exchange Trade System (CFETS), a sub-institution of the People’s Bank of China, announced they have signed a Memorandum of Understanding (MoU) in Shanghai today.
The document paves the way for the establishment of a joint venture in the United States, with CME Group and CFETS set to work closely in exploring opportunities and promoting each other’s market infrastructure and products through cooperation programs, and facilitating the development of the US and Chinese markets.
“We are pleased to be able to play an active role in promoting trade and cooperation between the United States and China,” said Terry Duffy, Executive Chairman and President of CME Group. “As China continues on its path of financial market liberalization and RMB internationalization, we believe that there are unique opportunities for CME Group and CFETS to work closely together to create a marketplace that best serves needs of the derivatives industry.”
“China is key to our global growth strategy, and this MOU with CFETS marks another key development in our China roadmap,” said Phupinder Gill, Chief Executive Officer of CME Group. “We believe this MOU will pave the way for greater collaboration between CME Group and CFETS, and bring about enhanced trading opportunities and benefits for our global customer base trading foreign exchange and interest rates products.”
Pei Chuanzhi, President of CFETS said, “Our cooperation will bring mutual benefits to both organizations, facilitate the connectivity and opening-up of financial markets of China and the United States, as well as meet the demand of Sino-US economic entities to hedge their interest rates and foreign exchange risks. At the same time, our collaboration will enable financial markets to drive economic growth, enhance the welfare of the people of both countries, and further promote international collaboration.”
The interest of western companies into the Chinese market has been growing rapidly over the past several years – this is a trivial thing to say. CFETS is an important partner to gain in this respect. In 2012, Bloomberg was the first foreign information provider to get access to the CFETS. Back then the company became authorised to deliver internationally live, interbank pricing for China’s onshore Renminbi (CNY) market, directly from CFETS.
CME Group itself has been tapping various opportunities related to the Chinese market for ages. To take one example from the past – in September 2012, CME unveiled plans to add deliverable Renminbi (CNH) futures to its offering. If you’d prefer a more recent example, you may recall that under the latest partnership agreement between CME and FTSE Russell, the launch of a futures contract based on the FTSE China 50 index is envisaged.
To view the official press release by CME Group on its partnership with CFETS, click here.