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Foreign Exchange

Six more banks start trading onshore yuan options market; 20 in total

Two foreign banks and four local Chinese banks have joined the onshore yuan options market, bringing the total number of market makers to 20, reports Derivatives Intelligence, a sister publication of EuromoneyFXNews.com

The China Foreign Exchange Trade Center confirmed that Calyon Bank (China), Sumitomo Mitsui Banking Corporation (China), China Everbright Bank, Bank of Ningbo, Guandong Development Bank and Shanghai Pudong Development Bank, are now licensed to trade onshore options, DI reported. The onshore market began trading on April 1.

 

More established yuan market makers tell EuromoneyFXNews that the onshore options market has been developing slowly with average daily volumes in the range of $20 million-to-$100 million a day, with average ticket sizes between $5 million and $10 million, with occasional trades of $20 million. Conversely, average daily volumes in the offshore (CNH) options market have been about $200 million, according to some estimates.


Due to the rules that only allow customers to buy options, the growth in volumes will be slow, while client activity has been light, one Hong Kong-based market maker tells EuromoneyFXNews. He adds that Chinese banks have been keen to get involved and gain experience of market making in preparation for further liberalisation of the currency market, rather than to transact large client volumes.


Other banks participating in the market are, Bank of China, Bank of Communications, China CITIC Bank, Citibank (China), Deutsche Bank (China), HSBC Bank (China), Industrial and Commercial Bank, Industrial Bank Co., China Construction Bank, Agricultural Bank of China, Bank of Montreal (China), Standard Chartered Bank (China), Bank of Tokyo-Mitsubishi UFJ (China) and China Development Bank.

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