HKEx Plans Indexes Tracking Yuan Against Currency Baskets

  • Move could provide benchmark to investors: Scotiabank
  • Exchange looking to offer U.S. dollar-yuan swaps clearing

The operator of Hong Kong’s stock exchange is preparing to publish a gauge tracking the yuan’s moves against currency baskets, as well as index futures and options in the Chinese currency.

The measure, to be offered jointly with Thomson Reuters Corp., is subject to regulatory approval, Hong Kong Exchanges and Clearing Ltd. Chief Executive Officer Charles Li said at a conference in the city on Tuesday. He added in a blog post that this will be the first tradable yuan index.

Separately, Julien Martin, head of fixed income and currency product development at HKEx, said the bourse plans to roll out two new products on June 23. One will track a basket of currencies similar to the China Foreign Exchange Trade System’s yuan index, while the other will be linked to a basket of major Asian currencies, Martin said.

The proposal comes at a time when the People’s Bank of China is attempting to shift the market’s focus to the yuan’s moves versus a group of exchange rates, rather than against the dollar alone. Hong Kong’s stock exchange has said it will roll out at least six futures contracts to cover the yuan against various currencies widely used in the Asia-Pacific region.

“Market focus has been partly shifted from the yuan’s fixing to the basket,” said Gao Qi, a Hong Kong-based strategist at Scotiabank. “It could provide another benchmark to the investors. HKEx aims to enhance Hong Kong’s status as an offshore yuan center.”

Currency Swaps

Asia’s largest stock exchange operator also plans to “shortly” offer U.S. dollar-offshore yuan cross-currency swap clearing services because of market interest, Li said in the blog post on the HKEx website. “We will further expand OTC Clear’s offering to cover clearing for wider types of RMB-based FX products.”

HKEx has been examining plans to provide inter-access to bond markets between China and Hong Kong following the launch of the equity link to Shanghai in 2014, Li said. That would be followed with bond index futures and credit default swap products derived from the bond market.

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