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Foreign Exchange

CME to launch dollar-denominated renminbi futures

CME Group, host of the world’s largest FX futures trading platform, is to launch two US dollar-based exchange-traded renminbi futures contracts.

The contracts will launch on August 23 on the bourse’s International Money Market division. The first settlement month will be September. The contract size will be $100,000 and an e-micro version worth $10,000 will also be offered. Both contracts will trade on the bourse’s Globex e-trading platform. Tick sizes for standard contracts will be quoted at Rmb0.0010 per dollar.

Daily pays and collects will be priced in renminbi, but translated into dollars via the People’s Bank of China’s daily fixing rate. The bourse will also offer clearing for privately negotiated block trades via CME ClearPort, its clearing house for over-the-counter contracts.

CME has listed yuan futures denominated in renminbi since 2006. Those contracts, paired against the euro, dollar and yen, are priced with contract sizes of Rmb1 million ($155,000).

“Given the yuan's movement toward greater convertibility and the growing offshore trade of the currency in Hong Kong, CME Group has developed these innovative futures contracts to enable our customers to manage their currency risk more effectively with the counterparty risk mitigation benefits of an exchange-traded product,” says Roger Rutherford, FX product managing director at CME.

Rutherford points to recent strong growth in the bourse’s rouble and real contracts, which have seen year-to-date growth of 350% and 450%, respectively.

“These increases in both volumes and open interest reflect increasing demand for credit risk mitigation in emerging-market products, and we believe that our new yuan futures products provide these same benefits for customers managing their yuan currency risk,” Rutherford adds.

Though the bourse lists a wider range of pairings than other exchanges, rival InterContinentalExchange recently launched a slate of euro-denominated contracts with similar face values to those offered by the Merc.

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