The Chicago Mercantile Exchange (CME) and the China Foreign Exchange Trade System & National Interbank Funding Center (CFETS), China’s foreign exchange and bond market, announced in March a multiyear agreement through which Chinese financial institutions and investors will have access to the CME’s forex futures and options through the exchange’s Globex electronic trading network. Interest rate products were also included in the agreement.
CFETS, also known as the National Interbank Funding Center, is part of the People’s Bank of China central bank and is the country’s only foreign exchange and interbank money market. Through the agreement, CFETS will become a CME clearing member and provide access for Chinabased investors who will be trading CME products. The terms of the agreement are subject to final approval by CFETS’ and CME’s governing bodies and regulatory agencies within China and the U.S.
In a CME press release, CFETS President Xie Duo said, “On CFETS’ path to accomplishing further developments in China’s interbank foreign exchange market, providing valid channels of new products for our member institutions is important for our success in the future. Our cooperation with CME provides a great opportunity for us to learn current experiences and practices associated with developing and deepening international financial markets.”
CFETS currently calculates and officially publishes key benchmark rates, such as the renminbi (yuan) benchmark exchange rate and the CHIBOR money-market rate in China. The agreement, which encompasses electronically traded forex and interest rate futures and options, will be marketed jointly by CFETS and the CME.
“Access to CME’s global interest rate and FX futures and options contracts will provide Chinese institutions and investors with a new range of foreign currency denominated investment and risk management tools that complement CFETS’ product offerings,” said CME CEO Craig Donohue in the press release.
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