HKEX needs time to develop mainland metals business

Source:Reuters-Global Times Published: 2018/5/17 17:48:42

The head of Hong Kong Exchanges and Clearing (HKEX) on Thursday said it would take time for the group to develop its metals business on the Chinese mainland.

That includes plans such as starting its mainland commodity business in Qianhai, South China's Guangdong Province, and developing a warehousing and logistics network through its London Metal Exchange (LME) operations.

"We need a lot of patience. We need to develop the relationship and trust," HKEX chief executive Charles Li said at metals industry event LME Week Asia 2018 hosted by the bourse in Hong Kong.

A new fee for bilateral trades that reference LME prices will start on June 1. Market participants say they are not sure how the LME will enforce payment for these contracts which are not traded on the exchange.

The LME, bought by HKEX around five years ago, has for years pursued its ambition to set up warehouses on the Chinese mainland, the world's biggest consumer of metals. But it has been without success so far as Chinese regulators have nurtured the mainland's exchanges.

The Hong Kong bourse is also focusing on how to better connect the Chinese mainland commodity market with the LME and other international markets, while its onshore commodity business at its Qianhai Mercantile Exchange (QME) is still waiting for regulatory approval.

The QME was launched under Guo Xiaoli, former general manager at the Zhengzhou and Dalian commodity exchanges.

"This year it's more of a work in progress," Li said.

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