CME to Accept Renminbi Held in Hong Kong as Collateral
December 5, 2011
CME Group said Sunday it will accept offshore Chinese renminbi as collateral in the trading of futures contracts.
The operator of the world's largest and most diverse derivatives marketplace said its clearing unit will accept renminbi held in Hong Kong as collateral, starting in January.
HSBC Global Banking and Markets and the CME said that HSBC Hong Kong will serve as CME's first Far East clearing custodian in Asia.
HSBC Hong Kong will hold renminbi deposits from CME Group customers and use those deposits as collateral.
“We are delighted to partner with HSBC in Asia to inaugurate this new service and look forward to adding further asset types and currencies over time,’’ said Kim Taylor, President, CME Clearing.
“The agreement between CME Clearing and HSBC Hong Kong, the first of its kind, will provide CME and its members with access to this increasingly dynamic region,’’ said Diane S. Reyes, Global Head of Payments and Cash Management, HSBC, said.
Renminbi is the official currency of the People's Republic of China. Renminbi are legal tender in mainland China, but not in Hong Kong or Macau.
Before 2009, the Chinese government prohibited almost all forms of yuan holdings or transactions by foreign entities. Transactions between Chinese companies and international firms would have to be denominated in US dollars.
In June 2009, China officials announced a pilot scheme where transactions were allowed between businesses in Guangdong and Shanghai and certain counterparties in Hong Kong, Macau and chosen nations.
Lawrence Fok, chief marketing officer, of Hong Kong Exchanges and Clearing Limited, said Friday that the Hong Kong Exchanges are moving to create a “renminbi equity support facility” that would allow investors “to purchase shares in renminbi even if they don’t have renminbi on hand.’’
