Hong Kong Exchanges and Clearing Limited (HKEX) and Thomson Reuters have signed an agreement for the creation of a new series of Renminbi (RMB) indices. The RMB indices will serve as the basis for products, such as exchange traded products, that help investors manage currency risk.
Charles Li CEO, HKEX, said: “Our RMB indices will serve as the basis for products to help investors manage currency risk.”
The new global benchmarks will reflect the development of the RMB exchange rate against other major currencies and is the latest step in RMB’s internationalisation. HKEX operates Hong Kong’s securities and derivatives markets as well as four clearing houses in Hong Kong: three of which provide clearing and settlement services for ETPs.
The news follows the International Monetary Fund’s announcement in December last year that reserve currency status has been granted to RMB, which puts it in the same group as US dollar, euro, sterling and Japanese Yen as globally accepted vehicles through which central banks and financial organisations may repay international debt.
Charles Li, CEO of HKEX, said in a statement: “We are pleased to announce new benchmarks to support the internationalisation of RMB and Hong Kong’s position as a key hub for connecting international and Mainland markets and their participants… Our RMB indices will serve as the basis for products to help investors manage currency risk, which will help maintain HKEX’s leadership in introducing RMB products for the offshore market.”
Sanjeev Chatrath, Managing Director, Financial & Risk, Asia Pacific at Thomson Reuters, added: “Thomson Reuters sits at the heart of global financial markets as a leading independent benchmark operator as well as interbank primary market and dealer-to-client liquidity provider for RMB transactions. This partnership reaffirms Thomson Reuters’ open platform and trusted philosophy, and will go a long way to help market participants understand, analyse and capture opportunities that the RMB’s internationalisation presents at a time of increasing significance of RMB on the world stage.”
ETF Securities currently offers the ETFS Short CNY Long USD (SCYP), which is listed on the London Stock Exchange. It provides investors with exposure to Chinese Renminbi relative to US Dollars by tracking the MSFX Short Chinese Renminbi Index, which aims to reflect the performance of a position in forward contracts which are rolled on a bi-monthly basis. It has a management fee of 0.59%.
HKEX launched the world’s first physically delivered RMB currency futures in September 2012, now considered the most liquid listed RMB futures contract in the world with US$312 million notional traded daily and over US$2.8 billion in open interest in the first quarter of this year.
The new indices are designed to be transparent, tradeable and compliant with the International Organisation of Securities Commission’s (IOSCO) principles for financial benchmark governance and administration.
Details of the new index series will be announced in the next few weeks.