Bloomberg News

CME Group to Accept Offshore Renminbi as Futures Collateral

December 06, 2011

(Updates with strategist comment in fourth paragraph.)

Dec. 5 (Bloomberg) -- CME Group Inc., the world’s largest futures exchange, will accept the so-called offshore renminbi as collateral on futures trading as China seeks to promote the yuan as a global currency.

The currency will be accepted as collateral in January, Chicago-based CME Group said in a statement on its website dated yesterday. HSBC Holdings Plc’s Hong Kong unit will serve as the firm’s Asian clearing custodian.

The offshore renminbi has been trading since July 2010 and was introduced to facilitate trade between China and other counties and reduce the nation’s reliance on the U.S. dollar. Trading in the yuan, a denomination of China’s currency, is limited to a band set daily by the People’s Bank of China.

“There’s clearly demand and appeal for offshore Chinese renminbi as a currency, not only for trade but also for investment,” said Mike Moran, a senior currency strategist in New York at Standard Chartered Plc. “It underscores the broader internationalization of the Chinese yuan.”

HSBC will hold offshore Chinese renminbi deposits from CME Group clients and use them as collateral.

“As our business in Asia grows, we are looking at ways to provide services that fulfill the needs of our increasingly diverse customer base,” Kim Taylor, president of CME Group’s clearinghouse, said in the statement.

In Hong Kong’s offshore market, the yuan gained 0.06 percent to 6.3810 at 10 a.m. in New York.

The yuan fell 0.07 percent to close at 6.3641 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency is allowed to fluctuate as much as 0.5 percent on either side of its daily fixing.

--Editors: Dave Liedtka, Greg Storey

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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