Georgina Lee HONG KONG (Reuters) – CME Group in Chicago opened options trading for CNY futures on Monday as it looks to deepen interest in a market used by investors to bet on or hedge against the Chinese currency trend.
Hong Kong has offered similar exchange-traded options since
, despite bringing the product to CME — the world’s largest derivatives exchange — — Possibly a move towards competing with banks that dominate options by selling directly to customers. “Many traders no longer see CNH as an emerging market currency the way they did a decade ago,” CME Group (Nasdaq Stock code: So ) is the executive director of foreign exchange products in London, referring to the stock symbol for offshore trading yuan.
Povey said clients ranging from investment institutions to small traders are interested in exchange-traded yuan products.
A futures contract is a financial contract in which parties agree to trade at a fixed price in the future. Options offer their buyer the opportunity to buy or sell an underlying asset (in this case, a futures contract) at a fixed price in the future. Exchange-traded options provide a way to bet on the movement of the yuan without having to deal directly with the bank, which issues the option and It is sold to clients in over-the-counter transactions in far greater volumes than those settled on global exchanges.
“We’d like to see liquidity develop there on par with the over-the-counter market,” said Tim Brooks, head of FX options at Optiver in London, which will trade New CME Derivatives.
CME options have expiry dates ranging from weekly, monthly or annual and are based on futures with a notional amount of $
contract,.
CME is a smaller There are many RMB trading centers. Some who trade both over-the-counter and exchange-based options said volumes could take a while to pick up. ” FX contract volumes are still struggling for many exchanges, which are dominated by retail traders, Very few big banks are participating as market makers,” said Mukesh Dave, chief investment officer at Singapore-based hedge fund Aravali Asset Management.
As of the end of March, CME Offshore in April Total RMB futures open interest $.3 million, with $11. Hong Kong Exchanges and Clearing’s trading volume was 9 million, data from both exchanges showed.
(This story has been corrected for a typo in the executive’s name in paragraph 7) 50