The Hong Kong Mercantile Exchange ("HKMEx"), established to bridge international commodities markets to China, and LCH.Clearnet, the global clearing house, have agreed initial terms for LCH.Clearnet to provide clearing for HKMEx, subject to regulatory approval.
HKMEx is developing customer-focused products and hiring a world-class workforce and experienced management team to launch a state-of-the-art commodities platform for the region.
"We have intensively researched the question of how best to meet the clearing needs of market participants in the HKMEx and have concluded with great confidence that partnering with LCH.Clearnet, a leader in its industry and also - crucially - independent, is what we need," said HKMEx Chairman Barry Cheung. "We are confident in the experience and technology on offer from our new colleagues," he said.
LCH.Clearnet will provide clearing services to HKMEx using existing clearing technology, optimising operational efficiencies and mitigating counterparty credit risk for market participants. As a clearing house, LCH.Clearnet acts as the counterparty to each side of a transaction, taking on the risk should one of the parties fail to meet its obligations.
Roger Liddell, Chief Executive of LCH.Clearnet, said: "HKMEx has the potential to be a key turning point in the development of commodities trading in Asia. We look forward to supporting the growth of this market with our unparalleled clearing expertise."
LCH.Clearnet has a long history of clearing commodities trades, providing services for the London Metal Exchange and NYSE Liffe. Dedicated to providing innovative clearing solutions to new markets, LCH.Clearnet recently launched clearing for the Nodal Exchange, the first marketplace to use a locational (nodal) market for forward power trading.