Introduction to HKEx London Metal Mini Futures. Ms. Bonnie Liu Senior Vice President HKEx Asia Commodities October 2014

Transcription

1 Introduction to HKEx London Metal Mini Futures Ms. Bonnie Liu Senior Vice President HKEx Asia Commodities October 2014

2 HKEx Asia Commodities Platform

3 HKEx Business Overview Cash Derivatives Cash Equity Equity Derivatives FIC Commodities SEHK Hong Kong Stock Exchange HKFE Hong Kong Futures Exchange LME London Metal Exchange HKSCC HK Securities Clearing House HKCC HK Futures Clearing House LME Clear LME Clearing House SEOCH HK Stock Options Clearing House OTC Clear OTC Derivatives Clearing House HKEx operates three exchanges and five clearing houses 3

4 Why Trade Commodities on HKEx? Established Platforms HKFE + HKCC International Regulatory + Risk Management Mainland EPs/CPs HK Commodities Platform Distribution to International Players Asian Time Zone RMB Readiness 4

5 Why Metals? Aluminium Zinc Copper Major Users Construction Packaging Transportation Automotive Construction Automotive Batteries Construction Electronics Automotive China % of World Consumption 45% 44% 44% YOY Growth in % 11% 11% 5

6 Who Will Trade These Products? Chinese Retail Investors Traditional Brokers Physical Players Various liquidity provider programmes aim to incentivise different types of market players 6

7 London Aluminium/Zinc/Copper Mini Futures ( London Metal Mini Futures )

8 Contract Specification London Metal Mini Futures (Subject to Regulatory Approval) Item London Aluminium Mini London Zinc Mini London Copper Mini Underlying Commodity Contract Size High Grade Primary Aluminium as defined in the LME Rules from time to time Special High Grade Zinc as defined in the LME Rules from time to time 5 tonnes / contract Copper Grade A as defined in the LME Rules from time to time Trading Currency Contract Months Trading Hours Trading Platform RMB Spot Month and the next eleven calendar months 9:00am to 4:15pm (day trading session) 5:00pm to 1:00am the next morning (after-hours trading session) HKATS Tick Size RMB 5 / tonne RMB 10 / tonne Last Trading Day (LTD) Final Settlement Day (FSD) Final Settlement Price (FSP) Settlement Method The LTD determined by the LME for the Aluminium/Zinc/Copper Futures Contract (i.e. usually two business days before the third Wednesday of the Spot Month) If it is not a HK Business Day, the LTD shall be the immediately preceding HK Business Day The second HK Business Day after the LTD Shall be a whole number, determined by the Clearing House; shall be the Official Settlement Price determined and published by the LME for its the Aluminium/Zinc/Copper Futures Contracts, and converted to RMB equivalent using the spot USD/RMB fixing published by the Treasury Markets Association in Hong Kong at 11:15 a.m. Hong Kong time on the LTD. It is rounded up if the figure in the first decimal place is 5 or above and rounded down if it is below 5. Cash settled contract of difference Trading Fee (per side) RMB 3 RMB 5 Margin 6% 4% 8

9 Contract Highlights I London Aluminium Mini London Copper Mini London Zinc Mini LME High Grade Primary Aluminium LME Grade A Copper LME Special High Grade Zinc Final Settlement Price LME Official Settlement Price 2 nd Ring Close Last Trading Day (LTD) 2 Business Days before the 3 rd Wednesday of the Spot Month Settlement Type Cash Settlement 9

10 Contract Highlights II Contract Size 5 tonnes Contract Structure Monthly Expiry Contracts Trading Hours HK Time 09:00 16:15 (T session) and 17:00 01:00 (T+1 session) UK (BST) 02:00 09:15 (T session) and 10:00 18:00 (T+1 session) Block Trade Available 10

11 Why are London Metal Mini Futures Denominated in RMB (CNH)? 1 To match increasing RMB exposure of underlying physical contracts 2 To utilise growing offshore RMB liquidity pool in Hong Kong 3 To ease margin financing for trading companies with offshore RMB 4 To set up RMB pricing during the Asian Time Zone Establish RMB benchmark for metals during the Asian Time Zone 11

12 Why Use the TMA CNH Pricing? 1. What is the TMA? HK Treasury Market Association 18 Contributing Banks Regulated by Hong Kong Monetary Authority 2. What is TMA CNH Price? Serves as the benchmark for the exchange rate of USD against CNH in Hong Kong Published at 11:15a.m. every Hong Kong business day from Monday to Friday except public holidays Most liquid point of CNH 3. How is TMA CNH Price calculated? Average of the middle of bid/offer spreads Excluding highest three Excluding lowest three 4. How will the TMA CNH Price settle the London Metal Mini Futures? Last trading day of London Metal Mini Futures Use the TMA CNH Price to convert the LME Official Settlement Price from USD to RMB TMA CNH price is the best currency conversion to settle London Metal Mini Futures 12

13 Incentive Programs Incentive Programs Key Criteria Key Contents Targeted Participants Liquidity Provider Program To fulfill minimum required trading time and bid-offer spread Trading fee rebates Cash rewards Metal: 5-6 per product Active Trading Program All Participants To fulfill minimum required trading volumes Trading fee rebates Metal: 10 Active Trading Program Physical Users Only physical players are eligible for this program To fulfill minimum required trading volumes Trading fee rebates Metal: 12 Marketing Champion for ACD Products To do marketing seminars for ACD products Cash rewards All HKFE participants Our incentive programs provide trading fee rebates and cash rewards 13

14 Liquidity Provider ( LP ) Program London Aluminium/Zinc/Copper Mini Futures Duration No. of LPs Target LPs 12 months 5-6 per product All market players HKFE Contracts London Aluminium/Zinc/Copper Mini Futures Trading Session Daily Trading (T) Session After-Hour Trading (T+1) Session 100% rebate of exchange fees upon fulfillment of LP requirements. Key Incentives Cash reward per month for top five LPs Top LP: HKD100k per product We offer liquidity providers generous cash rewards as well as 100% trading fee rebates 14

15 Active Trader Program I London Aluminium/Zinc/Copper Mini Futures Duration Targeted Clients Trading Session 12 months All market players Daily Trading (T) Session After-Hour Trading (T+1) Session Trading Volume Requirements London Aluminium Mini Futures: no less than 3,500 contracts per month London Zinc Mini Futures: no less than 1,500 contracts per month London Copper Mini Futures: no less than 2,000 contracts per month Incentives A client shall be eligible to enjoy the benefits as stated below, upon the fulfillment of the monthly trading volume requirements of each product. 75% trading fee rebate for the first 6 months 50% trading fee rebate for the rest 6 months We offer all market players 50%-75% trading fee rebates 15

16 Active Trader Program II London Aluminium/Zinc/Copper Mini Futures Duration 24 months Targeted Clients Physical Users Key Incentives Months 1-6: Months 7-12: Months 13-24: 100% rebate of the trading fees 50% rebate of the trading fee 35% rebate of the trading fee Obligations (subject to annual review) Min. trading volume is no less than 16,000 contracts of London Aluminium/Zinc/Copper Mini Futures all together for every three months We offer physical users 35%-100% trading fee rebates 16

17 Marketing Champion Terms Duration Potential Participants Details 3 months x 2 rounds All HKFE participants No min volume requirements (coal weights 50% of the trading volume and Key Criteria LME mini metals volume weighs the rest 50%) Number of new accounts opened Number of marketing events held & number of locations for marketing events Marketing event proposals Trading volume Cash rewards basing on EP performance of key criteria during each round Key Contents Top Active EP: to reimburse HKD200,000 marketing expense 2nd Active EP: to reimburse HKD150,000 marketing expense 3rd Active EP: to reimburse HKD100,000 marketing expense 4th Active EP: 1 VIP LME Week Asia Table 5th Active EP: 10 LME seminar tickets 17

18 Week One: Thanksgiving Week Terms Details Period The first launch week Targeted Clients All market players Key Terms No minimum volume requirements Key Incentives Fee rebate of 100% for all market participants We waive the trading fee on Week One for the whole market 18

19 Conclusion

20 What We Want You to Take Away The first batch of base metal futures to be launched in Hong Kong London Metal Mini Futures are denominated in RMB After-hour trading session is post mid-night from 5pm till 1am Ideal arbitraging tools with China s and international related futures 20

21 Disclaimer Hong Kong Exchanges and Clearing Limited (HKEx) All rights reserved. All information contained herein is provided for reference only. While HKEx endeavours to ensure the accuracy, reliability and completeness of the information, neither it, nor any of its affiliates makes any warranty or representation, express or implied, or accept any responsibility or liability for, the accuracy, completeness, reliability or suitability of the information for any particular purpose. All proposed products described in this presentation are subject to contract, which may or may not be entered into, and regulatory approval, which may or may not be given. The terms of these proposed products, should they be launched, may differ from the terms described in this presentation. HKEx accepts no liability whatsoever to any person for any loss or damage arising from any inaccuracy or omission in the information or from any decision, action or non-action based on or in reliance upon the information. The information does not, and is not intended to, constitute investment advice or a recommendation to purchase or sell futures and / or options contracts or to make any other kind of investment decision. Any person who intends to use the information or any part thereof should seek independent professional advice. Distribution, redistribution, reproduction, modification or transmission of the information in whole or in part, in any form or by any means are strictly prohibited without the prior written permission of HKEx. Futures involve a high degree of risk. Losses from futures trading can exceed your initial margin funds and you may be required to pay additional margin funds on short notice. Failure to do so may result in your position being liquidated and you being liable for any resulting deficit. You must therefore understand the risks of trading in futures and should assess whether they are right for you. You are encouraged to consult a broker or financial adviser on your suitability for futures trading in light of your financial position and investment objectives before trading. 21