Bank of China to clear SGX derivatives
Singapore
SINGAPORE'S position as an offshore renminbi (RMB) hub got a boost on Friday with the Singapore Exchange (SGX) partnering the Bank of China (BOC), making the latter the first Chinese settlement bank for the SGX derivatives market.
The Singapore bourse operator said it will add three new Asian foreign exchange (FX) futures contracts - Chinese RMB (USD/CNH, CNY/USD), Japanese yen (USD/JPY) and Thai baht (THB/USD) to its offerings, available for trading from Oct 20.
This also makes BOC the pioneer market-maker for SGX's RMB futures.
The announcements, made at the RMB internationalisation forum on currency futures and opportunities, follow a partnership agreement inked between the two parties in September last year.
Magnus Bocker, chief executive officer of SGX, said the enhanced SGX Asian FX suite widens the window for more investors to tap on the growth opportunities across major Asian markets and manage their currency exposures at the same time.
To allow RMB to be used for all open positions on SGX derivatives clearing, SGX will add RM cash collateral to its list of acceptable margin collateral (G5 currencies).
BOC chairman Tian Guoli said interest from investors and enterprises in the use of RMB has risen significantly, with 61 per cent of surveyed customers expressing intent to increase RMB clearing and the use of RMB in cross-border trade.
"According to Bank of China Offshore RMB Index, RMB use in the international financial markets hit a record high in the second quarter of 2014, increasing 73.85 per cent in comparison to the same period last year."
Josephine Teo, Senior Minister of State for Finance and Transport, pointed out that since the launch of RMB clearing arrangements in May last year, Singapore's RMB market has shaped up well.
She said the total RMB deposits placed in Singapore from June 2013 to June 2014 grew 84 per cent to 254 billion yuan (S$52 billion) while RMB-denominated loans including trade finance, grew in tandem at 88 per cent and have surpassed half a trillion yuan.
In terms of RMB FX, Singapore's average daily traded volume almost quadrupled year-on-year to reach close to US$70 billion.
Singapore is the second-largest international offshore RMB hub, with 21 trillion yuan cleared between January and August this year by ICBC Singapore - the only authorised yuan-clearing bank in the Republic at that time.
