Asian commodity markets positioned as global price-setters
Developing exchanges that can attract global liquidity and establish benchmark pricing for commodities remains a pivotal challenge for the region. January 08, 2014 | Mobasher KazmiCurrent developments in Asia’s exchange-based commodity markets may prove to be a key turning point in the evolution of the industry from an immature and fragmented one to a rapidly growing and liquid one. Developing exchanges that can attract global liquidity and establish benchmark pricing for commodities for the region remains a pivotal challenge. While the Hong Kong Mercantile Exchange notably failed to gain traction on its precious metals contracts, the region retains demand for a variety of commodity products. Indeed, both China and Indonesia are attempting to reverse this paradigm through a series of small albeit important steps. Consider the recent announcement from China’s Bohai Commodity Exchange, which is launching an online trading platform based in Hong Kong. Investors will now be in a position to place purchase and sell orders for up to 70 different types of commodities where all transactions are to be conducted and settled in the renminbi. This provides value for the sophisticated portfolio manager seeking diversification and exposure towards an asset class that retains exclusivity from an alternative investment standpoint. More importantly, for China, such initiatives encourage the use of its currency for global trade and investment, thereby strengthening efforts for internationalisation of the renminbi. In recent remarks, Yan Dongsheng, chairman of Bohai Commodity Exchange, downplayed the potential of competition with other bourses. With the premier London Metal Exchange (LME) in mind, he stated that, “The Bohai Commodity Exchange only provides spot trading while the LME trades futures products. We provide different services for industrial players and investors.” He was also quick to highlight the importance of China as the world’s largest consumer of various types of resources and materials. Given the fairly limited access foreign investors have to Chinese-based exchanges, it would be prudent for the China Securities Regu... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Exchanges, Markets & Exchanges, Trading & DataExchanges,Markets Exchanges,Trading & Data, Exchanges,Markets & Exchanges,Trading & Data, Keywords:Bohai Commodity Exchange, LME, SHFE, CSRC, ICDX, Commodity Futures Trading Regulatory Agency Bohai Commodity Exchange, LME, SHFE, CSRC, ICDX, Commodity Futures Trading Regulatory Agency
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