HKEX and Thomson Reuters today launched a series of RMB indices that measure the intraday performance of the RMB against a basket of key currencies.
The China Foreign Exchange Trade System, an arm of the People’s Bank of China, introduced the CFETS RMB Index last December indicating the RMB will be measured against a basket of trading partners’ currencies rather than just the US dollar alone.
HKEX and Thomson Reuters’ new index series will allow market participants to view intraday RMB movements according to a transparent and rules-based methodology. The new index series provides market participants with benchmarks that reflect the development of the RMB’s effective exchange rate against other major currencies.
Thomson Reuters-HKEX RMB Currency Index Series
The primary index measures the performance of the CNH against a basket of 14 key currencies. Indices are calculated hourly using WM/Reuters rates. The weight of each currency is determined by calculating the volume of trade between its issuer and Mainland China, as per publicly available data from UN Comtrade and the Hong Kong Census and Statistics Department.
Source: HKEX, Thomson Reuters, CFETS
The new index series is designed to be transparent, tradeable and compliant with the International Organisation of Securities Commission’s principles for financial benchmark governance and administration.
Source: HKEX, Thomson Reuters, CFETS
“This co-branded index series is another important addition to our infrastructure for RMB products,” said Charles Li, Chief Executive of HKEX. “As Chinese capital goes global over the next 30 years and more international equities and commodities are priced in RMB, our RMB indices will become a useful basis for products to help investors manage currency risk. We see great opportunities in fixed income and currency for Hong Kong and HKEX as the RMB continues to become more international,” he continued. “We continue to strengthen HKEX's leadership in introducing RMB products for the offshore market and develop Hong Kong as the global asset pricing centre for China.”
“We are delighted to further strengthen our commitment to the region, to the FX market and robust benchmarking with the launch of our co-branded RMB index series with our longstanding partner HKEX,” said Stephan Flagel, Global Head of Indices at Thomson Reuters.
“In view of China’s internationalisation and the RMB’s increasing presence as a global trading currency, it is a great opportunity for us to partner with HKEX to provide a series of indices that will use global standards to help market participants make better-informed investment decisions and manage risks. At a time when Chinese currency movements and market volatility are frequently observed, it makes sense for two trusted and independent names to launch these indices to capitalise on the significance of the RMB’s internationalisation,” he added.
HKEX held a launch event for the new RMB currency indices this afternoon, with around 200 market participants gathering to discuss the investment and trading implications of the new indices.
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