HKEx to Introduce its First Asia Commodities Contracts for Trading on 1 December

Hong Kong Exchanges and Clearing Limited (HKEx) will introduce its first Asia Commodities contracts - London Aluminium Mini Futures, London Zinc Mini Futures and London Copper Mini Futures - for trading on Monday, 1 December 2014, subject to market readiness.

The three mini metals contracts will trade in Renminbi (RMB). Other contract details, including the hours of the after-hours trading session, are shown in the tables below.

HKEx decided to postpone the introduction of its US-dollar traded API 8 Thermal Coal Futures so it could focus on the launch of the mini metals contracts. HKEx remains committed to the coal contract and will announce its rollout date later. 

"This is another big step in our commodities strategy following our launch of self-clearing at the London Metal Exchange (LME) last month and our announcement last month of new LME fees, starting 1 January 2015, to support our ongoing investment in the LME," said HKEx Chief Executive Charles Li.  " The new contracts will provide currency convenience, they will expand our range of RMB products, and they will further strengthen Hong Kong's position as the leading offshore RMB centre," Mr Li added.

"These new contracts are part of our fixed income, currency and commodities strategy in Asia and our efforts to expand our Hong Kong markets into new asset classes," said Romnesh Lamba, HKEx's Co-head of Global Markets.

"RMB traded mini-contracts traded at HKEx, referenced to the LME global reference price, further develops our coverage for global metals traders and enhances liquidity," said HKEx's Co-head of Global Markets and LME Chief Executive Garry Jones.

Trading Details

The new mini metals contracts will be traded on Hong Kong Futures Exchange Limited (HKFE) and cleared through HKFE Clearing Corporation Limited.They are all monthly cash-settled futures contracts.The trading hours for the new London Aluminium/ Zinc/ Copper Mini Futures will be 9:00 am to 4:15 pm and 5:00 pm to 1:00 am the next morning Hong Kong time Monday to Friday, excluding the public holidays on HKEx's trading calendar. Pre-holiday arrangements will also be the same as those for existing contracts traded on HKFE.  Key contract specifications are shown in the table below.

Liquidity Providers, Active Trader Programmes and Possible HKFE-LME Reciprocal Scheme

HKEx is seeking Liquidity Providers for the new contracts and there are two Active Trader programmes with fee rebates (please see this circular for details). HKEx is also aiming to introduce a scheme to encourage LME Members to become HKFE Participants and vice versa. Subject to regulatory approval, there will be a low-cost way for LME Members and related entities that meet certain requirements to become HKFE Participants, and for qualified HKFE Participants and related entities to become LME Members.

Key Contract Specifications

Underlying Commodity

High Grade Primary Aluminium
as defined in
the LME Rules and Regulations
from time to time

Special High Grade Zinc
as defined in
the LME Rules and Regulations
from time to time

Copper - Grade A
as defined in
the LME Rules and Regulations
from time to time

Contract Size

5 tonnes

Trading and Settlement Currency

RMB

Contract Months

Spot month and the next 11 calendar months (monthly contracts)

Trading Hours

9:00 am to 4:15 pm (day trading session) and 5:00 pm to 1:00 am (After-hours Trading Session)

Trading Platform

HKATS

Tick Size

RMB 5 / tonne

RMB 10 / tonne

Last Trading Day (LTD)

Two business days before the 3rd Wednesday of the spot month

Final Settlement Price

Shall be a whole number, determined by the Clearing House, and shall be the Official Settlement Price determined and published by the LME for its Aluminium/Zinc/Copper Futures Contracts, and converted to RMB equivalent using the spot USD/RMB pricing published by the Treasury Markets Association in Hong Kong at 11:15 am Hong Kong time on the LTD. It is rounded up if the figure in the first decimal place is 5 or above and rounded down if it is below 5

Settlement Method

Cash-settled

Holiday Schedule

Follow HKEx holiday schedule



Notes:
The London Metal Exchange, Hong Kong Futures Exchange Limited and HKFE Clearing Corporation Limited are wholly-owned member companies of HKEx.

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