HKEx’s USD/CNH futures reached a record open interest level of 25,250 contracts as of 5 January, and a month-on-month increase of 98 per cent in turnover in December last year.
China’s central bank set the daily reference rate for the RMB below 6.5 against the US dollar on 4 January, the lowest in more than four years, an indication that the PBOC is more tolerant of a weakening RMB.
The onshore RMB market started to adopt extended trading hours to 11:30 pm on the same day. The extended hours of the onshore market was matched by HKEx’s after-hours futures trading, which can serve as an efficient risk management tool for investors.
HKEx’s USD/CNH futures reached a record open interest level of 25,250 contracts (notional value of US$2.5 billion) as of 5 January 2016, surpassing the previous record of 24,018 contracts set on 4 January.
HKEx’s USD/CNH futures market has by very far the highest open interest level among other exchanges in the world.
In addition, the contract’s average daily volume swelled to 2,071 contracts in December 2015, up 98 per cent from the previous month, corresponding to a daily notional value of $207 million.
Since early November, the spread between the offshore CNH and onshore CNY exchange rate has trended up. On 6 January, it climbed to over 1,400 pips, the highest in four years. Such increased divergence reflects near term China FX policy uncertainty and depreciation risks.
HKEx’s USD/CNH futures will continue to serve as an effective risk management tool to manage RMB exchange risk exposure during periods of volatility. The number of Exchange Participants (EPs) in the market has climbed to 90, and six market makers will continue to enhance market liquidity.
Meanwhile, HKEx has extended incentives to solidify the development of its RMB currency futures market. The Active Trader Programme, which provides certain trading fee rebates to a limited number of traders subject to minimum volume thresholds, has been extended till the end of 2016.
Tap 'Read More' to access to our interim flash report for USD/CNH futures in January for more details.