International derivatives marketplace CME Group Inc (NASDAQ:CME) keeps strengthening its network of partners in China.
The company announced today that it has signed a Memorandum of Understanding (MOU) with China Construction Bank (CCB).
CME Group is now able to offer Offshore Chinese Renminbi (CNH) Futures Contracts with physical delivery in London for the first time. The contracts will be offered via CME Europe, CME Group’s European exchange, and will be supported by CCB.
Under the terms of the MOU, CCB also plans to participate in the London Silver Pricing, as administered by CME Benchmark Europe Limited, as well as to facilitate the trading of CME Group products for CCB’s customers in China.
“As the largest exchange-traded FX marketplace, we are pleased to partner with CCB which is one of the leading Chinese commercial banks and the official clearing bank of Chinese Renminbi in London,” said Terry Duffy, Executive Chairman and President of CME Group. “We believe this relationship will generate multiple benefits for the marketplace and drive innovation across a range of asset classes.”
Physically deliverable futures contracts for USD/CNH and EUR/CNH have been available on CME Europe since the European exchange started its operations in April 2014, delivering into Hong Kong. Now that CME Clearing Europe intends to work with CCB, CME Europe plans to amend these contracts so that physical delivery will take place in London, bringing cost and time-saving advantages to market users.
“The ability to transact during London hours is of paramount importance to those institutions who value flexibility in managing their positions in markets where prices can move sharply in short periods of time,” said William Knottenbelt, Senior Managing Director and Head of International, CME Group. “CME Group and CCB have shared a strong desire to promote RMB liquidity in London. We are committed to building out the necessary infrastructure and RMB products for a thriving marketplace as well as extending our partnership into other areas.”
CME Group and CCB will seek to engage with the Chinese and UK authorities on the benefits of the development of RMB products across a range of asset classes as well as on enhancing access for Chinese companies and financial institutions to international capital and the London markets.
The partnership with CCB is announced less than a month after CME sealed an index development and product licensing agreement with China Securities Index Co. Ltd. In August this year, CME Group and China Foreign Exchange Trade System (CFETS), a sub-institution of the People’s Bank of China, also signed a Memorandum of Understanding (MoU).
To view the official announcement from CME on the partnership with China Construction Bank, click here.