Hong Kong exchange to launch dollar-denominated mini contracts for base metals
The Hong Kong Futures Exchange (HKEX) plans to launch dollar-denominated mini contracts for six base metals in the coming months, the head of market development at the London Metal Exchange (LME) said on Monday. The standardised monthly futures contracts will reference LME prices and are being launched to “broaden access in the region for LME priced contracts”, Robin Martin told an industry event in Hong Kong. They will be aimed at retail investors.
The new offering comes five years after a similar product fizzled on the Singapore Exchange (SGX) and as mini metals contracts tradable in London saw no volumes last year.
SGX launched mini metals contracts in 2011, only to wind them down in 2014 after they failed to gain traction in the market. The LME’s major contracts are copper, aluminium, zinc, lead, nickel and tin.
The mini contracts are smaller than the LME contracts, with copper, aluminium, zinc and lead in five tonne lots and tin and nickel both in one tonne lots.
HKEX already has mini contracts traded in China’s yuan currency.
The new contracts are undergoing regulatory approval, Martin said.
“This time we hope LME members will support the minis,” said an industry source involved in the development of the new contracts.
“Last time it was via licensing in Singapore without support from LME members.”
HKEX bought the LME in 2012.
(By Shivani Singh and Tom Daly; Editing by Christian Schmollinger and Joseph Radford)