Hong Kong Exchanges and Clearing Limited (HKEX) has announced the launch of a cash-settled Mini USD/CNH (US dollar/Offshore Renminbi, or RMB) Futures contract. The new addition is a smaller-sized contract to complement the popular USD/CNH derivatives products, diversifying HKEX’s suite of currency derivatives to support the risk-management needs of global investors.
HKEX Interim Chief Executive Calvin Tai said:
HKEX has been leading Hong Kong’s development as a global fixed-income and currency hub, and these currency derivatives products serve to underscore our commitment to further enhancing the breadth and attractiveness of our markets.
Tai added:
The new Mini USD/CNH Futures will expand HKEX’s Renminbi derivatives product suite, providing investors with an enhanced range of risk-management tools. Not only will this help them optimise their capital efficiency, but it will further support the continued internationalisation of the Renminbi.
The the new Mini USD/CNH Futures is planned to launch in the first half of 2021, subject to market readiness.
HKEX launches the Mini USD/CNH Futures contract in response to demand from market participants, particularly medium-sized corporates and individuals, for cash-settled and smaller-sized contracts, helping investors to hedge the RMB currency risk of their positions in different assets, such as equities and commodities.
The contract size of Mini USD/CNH Futures is $20,000, or one-fifth the size of existing deliverable USD/CNH Futures at HKEX, allowing more precise hedging for market participants. The minimum investment will be lower than that of the existing deliverable USD/CNH Futures, as the required initial margin amount per contract will be lowered to around RMB2,000, subject to periodic adjustments.
Back in September 2012, HKEX launched the world’s first deliverable USD/CNH Futures contract and has seen strong growth in turnover over the years, tracking the rising demand for RMB products. This contract is now one of the most actively-traded RMB futures contracts in the world, with open interest of 28,223 contracts (ie US$2.8 billion in notional amount) at the end of 2020, up 22% from 2019.
In recent years, HKEX has diversified its currency derivatives product offering with futures contracts on CNH currency pairs against the Japanese yen, Euro and Australian dollar, USD-denominated CNH/USD Futures, USD/CNH Options, as well as futures on the Indian rupee against the USD and Offshore RMB.
